Stock indexes moved lower Thursday as a drop in new claims for unemployment benefits wasn’t enough to resolve worries about the economy.
The Dow Jones industrial average fell 59 points in afternoon trading, hovering just around the 10,000 level, after getting an early 45-point lift from the weekly unemployment report. Broader indexes also dipped.
The early boost from the positive jobless claims report turned out to be fleeting as investors returned their focus to nagging problems in the economy.
The market’s attention is already turning to a speech early Friday by Ben Bernanke to see if the Federal Reserve chairman sheds any light on the conundrum that stock investors are currently wrestling with: How weak is the U.S. economy and will it slide back into recession?
Investors want to “see if the pulse of the Fed is beating at a fast rate with anxiety over the economy,” said Peter Cardillo, chief market economist at Avalon Partners Inc.
Bernanke has been extremely cautious in his comments in recent weeks, calling the recovery “unusually uncertain.”
Stephen Lieber, chief investment officer at Alpine Mutual Funds, said: “He can’t exactly reverse his caution. But he can say there are actions he can take” to promote growth.
The Labor Department said first-time claims for unemployment benefits dropped to 473,000 last week, after jumping above 500,000 for the first time since November a week earlier. Economists were expecting a more modest drop to 490,000, according to Thomson Reuters.
“On the positive side, claims came down slightly compared to the shock last week,” said Oliver Pursche, executive vice president at Gary Goldberg Financial Services. “That said, the number still remains stubbornly high.”
In afternoon trading, the Dow fell 59.64, or 0.6 percent, to 10,000.42. The Standard & Poor’s 500 index fell 6.15, or 0.6 percent, to 1,049.18, while the Nasdaq composite index fell 17.99, or 0.8 percent, to 2,123.55.
Falling stocks outpaced rising ones three-to-two on the New York Stock Exchange, where volume came to 700 million shares.
The latest jobless claims report suggests that hiring remains weak. In a healthy economy, weekly claims usually fall below 400,000. At the height of the recession in March 2009, weekly claims peaked at 651,000.
Investors are still worried about a persistently high unemployment rate of 9.5 percent and a general reluctance of employers to hire workers.
On the positive side, this week’s report marked the first decline after three straight weekly gains.
Bond prices traded in a tight range, further indication investors are nervous about the economy. Investors tend to buy up Treasurys, driving interest rates lower, when they are worried about economic growth.
The yield on the 10-year Treasury note dipped to 2.50 percent from 2.54 percent late Wednesday. Its yield helps set interest rates on mortgages and other consumer loans.
Long-term bond yields are hovering around levels not recorded since early 2009, when the country was in the depths of the recession and stocks hit 12-year lows.
Low interest rates usually help to drive new growth because it makes it cheaper to borrow and buy everything from clothes to cars to houses. However that isn’t encouraging shoppers now because they are worried about jobs and opting to save instead.
In corporate news, Dell Inc. said data storage maker 3Par Inc. accepted its raised takeover bid of 1.52 billion, or $24.30 per share. Dell’s revised offer was better than rival Hewlett-Packard Co.’s offer of $24 per share.
Dell shares were unchanged at $11.79, while 3Par dropped 74 cents to $26.02. Shares of 3Par had jumped as the two computer makers appeared set for a bidding war that investors thought might drive the price even higher. Dell initially offered $18 a share for 3Par earlier this month before Hewlett-Packard jumped in with its bid.
Hewlett-Packard shares fell 9 cents to $38.15.
European markets got a lift from an improved consumer confidence reading on Germany’s economy. Germany’s DAX index rose 0.2 percent. France’s CAC-40 climbed 0.7 percent and Britain’s FTSE 100 rose 0.9 percent.
- Associated Press