A Mixed Finish At Wall Street
Stocks on Wall Street ended the week on a mixed note after seeing
significant selling pressure earlier in the day. While a disappointing
monthly employment report sent jittery investors out of the stock
markets early on, some investors looked for bargains in the afternoon
following a dismal performance in the previous session.
On
the economic front, the Labour Department released its highly
anticipated monthly report on the employment situation, showing that
employment continued to decrease in the month of August. The continued
job losses helped to lift the unemployment rate to 6.1%, its highest
level since September 2003. Non farm payrolls declined 84,000 in
August. The pullback was broad-based, including manufacturing,
construction and service industries. June and July were revised to show
bigger declines. June's revision was particularly large, to a 100,000
loss in jobs from a prior estimate of just 51,000.
Average hourly
earnings increased $0.07, or 0.4%, to $18.14. Though slightly above
expectations for the month, that's still up a modest 3.6% from a year
earlier, suggesting workers are having a hard time commanding higher
salaries in the face of a weak jobs market, a trend reflected in a
decline in unit labor costs last quarter.
The major averages
moved higher in late day trading, although the Nasdaq could not hold
onto its gain and ended the session below the unchanged line. While the
Nasdaq closed down 3.16 points or 0.1% at 2,255.88, the Dow closed up
32.73 points or 0.3% at 11,220.96 and the S&P 500 closed up 5.48
points or 0.4% at 1,242.31.
Despite of closing the week on mixed
note, the major averages all posted notable losses for the week due in
large part to Thursday?s sell-off. The Dow fell 2.8% for the
holiday-shortened week, while the Nasdaq and the S&P 500 posted
weekly losses of 4.7% and 3.2%, respectively.
If we say
Friday?s transaction in details, the Dow components pared their losses
in the afternoon, sending the blue chip index above the unchanged line.
Of the 30 stocks that make up the Dow, 18 ended the day higher, while
12 closed lower.
Bank of America was one of the biggest gainers
in the Dow. Shares of the national bank closed up 5.3 percent,
reversing most of the decline seen in the previous session.
AIG
also saw significant buying interest even through a Morgan Stanley
analyst downgraded the insurer to an Equal Weight rating due to
escalating liquidity concerns. Shares of AIG climbed 5.3 percent.
JP
Morgan Chase, Citigroup and American Express were among the other
financial stocks within the Dow that closed notably higher. JP Morgan
Chase closed up 4.5 percent, Citigroup closed up 4.2 percent and
American Express closed up 1.7 percent.
Wal-Mart and Hewlett
Packard also showed strength. Wal-Mart closed up 1.6 percent, compared
to a 1.1 percent gain by Hewlett Packard.
On the other hand,
Chevron ended the session with a considerable loss, hurt by a sharp
drop in oil prices. Shares of the oil producer closed down 1.2 percent,
extending a substantial decline seen in the previous session. The stock
closed at its worst level in nearly seven months. Microsoft closed
sharply lower as well. The software giant fell 2.7 percent, extending a
recent trend lower. With the decline, the stock set a monthly closing
low.
Other Dow components that ended the session lower include
United Technologies and Pfizer. United Technologies closed down 1.2
percent, while Pfizer fell 0.9 percent.
At Nasdaq, Friday was
shaped up as another session of hefty losses until buyers emerged
midsession to lend support. Leadership came from the financial sector,
which carried the major indices off their session lows.
Sentiment
received little help from technology, which is the largest among the
major economic sectors. Shares of tech firms have been hit during
recent sessions amid fears that a global slowdown will weigh on their
performance. Nokia, a global leader in phones and handsets, believes
its third quarter market share will be down sequentially, which seemed
to confirm the aforementioned concerns.
Meanwhile, Dell is
looking to divest its factories, according to The Wall Street Journal.
The move would free up capital for the firm by ridding itself of aging
assets and allow Dell to avoid the costs of idling factories during
slow demand.
However, the tech sector did receive leadership from
flash memory storage company SanDisk. SanDisk saw its shares surge amid
takeover chatter.
Financials garnered attention after Reuters
reported that Blackstone Group and KKR are each looking to buy parts of
Lehman Brothers. Their interest reportedly centres on the firm's real
estate and asset management businesses. Shares of Lehman finished near
their session high after showing losses early on. The news-helped
financials emerge as a leader, helping induce broad-based gains. They
were down 1.7% at their session low, right about the time the S&P
500 was down 1.6%. However, financials finished the day as the best
performing sector, up 3.2%. The S&P 500 ascended to close with
decent gains.
From the crude market, the sliding oil prices also
helped the overall sentiment. Oil retreated 1.4% to settle around
$106.40 per barrel. It is down 7.8% this week. Oil's decline was helped
by a stronger dollar. Given the concerns of a global slowdown, the U.S.
continues to attract funds as investors seek a safe investment
environment. As such, the dollar climbed 0.5% against a basket of
trade-weighted currencies. It is now up 3.0% this year.
Prior to
this, stock markets across the Asian region closed sharply lower on
Friday, although they ended the session off there lows. The benchmark
Nikkei 225 Index closed down 2.75% at 12,212.23 while Shanghai
Composite Index closed down 3.29% at 2,202.45, a fresh 20 month-closing
low.
The major European averages also saw significant weakness, with the U.K?s FTSE 100 Index closing down 2.3%.
Eyeing
on next week economic calendar, the investors will be looking at
several economic reports throughout the week for guidance. The
Department of Labor will be releasing it producer price index, which is
a key indicator of inflation at the producer level. Likewise, the
Department of Commerce will release its international trade data as
well as its retail sales data. Other data that may affect the markets
include the pending home sales report, the wholesale trade report, the
weekly jobless claims report and the business inventories report.
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