NEW YORK (CNNfn) - The Nasdaq composite index fell for its fifth straight session Thursday as frustrated investors opted to keep cash out of the markets, remaining uptight about the sluggish economy.
"The trading activity has a negative bias," Phil Dow, stock market strategist with Dain Rauscher Wessels, told CNNfn's The Money Gang. "The news has been negative and it's frustrating for investors and traders alike."
But analysts were heartened that the losses were negligible as what little momentum there was lost steam by the close of trading.
"There is a willingness on the part of investors to buy premium names in anticipation of a recovery, but I really think there isn't a lot of conviction on the part of buyers or sellers," said Ned Riley, chief investment strategist with State Street Global Advisors.
While the Nasdaq couldn't pull itself out of negative territory, the Dow Jones industrial average made several forays into positive territory throughout the session.
The Nasdaq composite index fell 3.04 points to 1,963.32, while the Dow Jones industrial average erased its losses to advance 5.06 points to 10,298.56. The Standard & Poor's 500 index shed 0.10 to 1,183.43.
July retail sales data and weekly unemployment claims failed to generate any enthusiasm that the sluggish economy was being pulled out of its funk.
Volume was better than recent sessions, but conviction was still questionable. Buyers will likely remain cautious in the absence of a catalyst.
"The level of frustration for many traders has reached a point where many are just tossing stocks into the market and have decided not to play for now," said Alan Ackerman, senior vice president with Fahnestock & Co.
Clouding the picture was technical trading that could push the major indexes in either direction, said traders.
"We are really teetering on some big support levels (10,200 on the Dow; 1,936 on the Nasdaq)," Mark Boutote, managing director with Direct Brokerage, told CNNfn's Market Call. "We're either going to see some support and a relief rally or this is going to be one of those precipitous things."
With most corporate results for the June quarter now released, the focus has shifted to economic data for signs of how the remainder of 2001 will shape up. So far, it's not a pretty picture.
The markets held near levels reached late Wednesday, when stocks tumbled after a negative outlook from network equipment maker Cisco Systems (CSCO: up $0.31 to $18.29, Research, Estimates) and the Federal Reserve's "beige book" report showing continued economic weakness.
Typically, the "beige book" is shrugged off by investors. The fact that there was such a strong reaction could signal how desperate market participants have become for any shred of economic buoyancy. This view is heightened during times when corporate news appears to be in short supply.
"Here's an index that nobody ever looked at and now everybody seems to look at for Fed action," said Boutote. "It came in not as good as anyone thought it would and it just had a dampening effect."
Market breadth was mixed. Nasdaq decliners topped advancers 1,976 to 1,683 with 1.45 billion shares changing hands. On the New York Stock Exchange, advancers nudged out decliners 1,721 to 1,365 as 1.08 billion shares changed hands.
In overseas stock markets, Europe's slipped while Asia's finished mostly lower. Treasury securities were up. The dollar was weaker against the euro and the yen.
Jobless claims edge up
The number of new jobless claims in the United States rose last week, but stayed below 400,000 for the third straight week, suggesting that the worst might be over for the U.S. job market. New claims for state unemployment benefits rose to 385,000 in the week ended Aug. 4 from a revised 352,000 the prior week, the Labor Department reported. Analysts surveyed by Briefing.com had forecast new claims of 380,000.
"The unemployment data says things may not have turned around yet and the retail sales support this," Liz Miller, portfolio manager at Trevor Stewart Burton & Jacobsen, told CNNfn's Market Call. "The second-half recovery is clearly not here, so investors are looking ahead for something to compel them."
They weren't finding it in the latest reports from retailers.
The nation's biggest retailers painted a mixed sales picture for July as the slowing economy continued to see consumers shift away from luxury and department stores, which generally saw lower sales, to more bargain-priced discount chains that posted gains.
Dow component and No. 1 retailer Wal-Mart Stores (WMT: down $0.36 to $54.17, Research, Estimates) reported a 6 percent increase in sales at stores open at least a year, greater than the 5.3 percent gain it posted a year earlier.
J.C. Penney (JCP: down $0.66 to $26.55, Research, Estimates) reported a 2.2 percent rise in same-store sales in July, and said that it anticipates second-quarter earnings, which it reports Aug. 14, to come in slightly better than Wall Street estimates.
Kmart (KM: down $0.56 to $12.48, Research, Estimates) reported a 3.4 percent increase in same-store sales in July, citing the revival of its Blue Light Special, which has helped drive sales.
But upscale retailer Saks (SKS: up $0.22 to $10.71, Research, Estimates) reported a 6 percent sales decline in stores open at least a year, and warned it would likely post a much wider-than-expected second-quarter loss.
No. 1 U.S. specialty apparel chain Gap (GPS: down $1.57 to $25.60, Research, Estimates) reported that sales at stores open at least a year fell 12 percent from a year earlier. The company also said it is eliminating 1,300 jobs and is taking a $30 million charge in the second quarter, as the nation's biggest apparel retailer tries to boost its sagging bottom line.
Solectron, Sun MicroSystems pressured
In other corporate news, electronics contract manufacturer Solectron (SLR: down $1.71 to $15.49, Research, Estimates) agreed to buy Canada's C-MAC Industries (EMS: up $3.58 to $26.25, Research, Estimates) for $2.7 billion.
Goldman Sachs and other analysts chimed in with mixed comments on Sun MicroSystems (SUNW: down $0.49 to $16.76, Research, Estimates) a day after the network computer maker and Japanese electronics company Hitachi announced a multibillion-dollar deal.
President Bush was due to announce his decision late Thursday about federal funding for stem cell research. Three biotechs that conduct stem cell research – Aastrom Biosciences (ASTM: up $0.47 to $2.25, Research, Estimates), StemCells (STEM: up $1.72 to $6.45, Research, Estimates), and Geron (GERN: up $2.04 to $14.94, Research, Estimates) – rose on the news. 
Click here to send mail to Staff Writer Catherine Tymkiw
|
