YAHOO: Downbeat economic data,
abysmal retail sales, and weak business prospects reminded investors just how
tenuous the macro environment has become. Sellers dominated Thursday's action
and pushed stocks sharply lower for the second straight session. The two-day
slide amounted to a 10.0% loss, the worst two day drop in nearly one month.
Job markets remain loose as
claims stand at recession-like levels. Weekly jobless claims for the week ended
Nov. 1 totaled 481,000, down 4,000 from the prior week. The weekly number was
roughly in-line with the consensus estimate, and the four-week moving average
held steady at 477,000. Economists await the October unemployment rate due
tomorrow morning.
Nonfarm business productivity
rose at a 1.1% annual rate in the third quarter, in-line with expectations.
Unit labor costs rose at a 3.6% annual rate, which was more than expected.
With job losses mounting,
consumers are less willing to spend their discretionary dollars. In turn, Nordstrom (JWN 15.23, -0.78), Gap (GPS 12.46, -0.38), American Eagle (AEO 10.01, -0.16), and Abercrombie & Fitch (ANF 26.55, -0.23) all reported
double-digit declines in October same-store sales.
Wholesalers and discounters
like BJ's Wholesale (BJ 36.22, +0.64) and Wal-Mart (WMT 54.47, +0.34) fared better, able to
benefit by attracting cash-strapped shoppers to their stores. Both posted
increased same-store sales for October.
Retailers haven't been the
only companies battling against stiff macro headwinds. Tech bellwether Cisco (CSCO 16.94, -0.45) posted
better-than-expected earnings per share results for the latest quarter, but
disappointed when it announced it expects revenue to take a downturn.
Challenging business
conditions continue weighing on actual earnings results and earnings
expectations. Analysts at Morgan Stanley project Goldman Sachs (GS 80.72, -6.71) will post its first
quarterly loss since the former Wall Street star went public just over a decade
ago.
Declines among financial
stocks made them the worst performing economic sector. It shed 6.7% this
session and is now just 10.8% above its 52-week low, reached nearly two weeks
ago.
After Google (GOOG 331.22, -11.02) walked away from a
proposed business alliance with Yahoo! (YHOO 13.96, +0.04), Yahoo stated it is a
strategic fit for Microsoft (MSFT 20.88, -1.20). Microsoft offered to pay Yahoo roughly $33
per share earlier this year, but walked away when Yahoo argued the price was
too low.
The negative bias among market
participants took stocks steadily lower as the session progressed. The major
indices finished near their session lows, each down more than 6.5%
week-to-date.DJ30 -443.48 NASDAQ -72.94 SP500 -47.89 NASDAQ Adv/Vol/Dec 570/2.39
bln/2191 NYSE Adv/Vol/Dec 538/1.53 bln/2575