MARKET SNAPSHOT: U.S. Stocks Drop After Economic Data
First Published Thursday, 7th February 2013 05:00 pm - © 2013 Dow Jones
By Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) -- U.S. stocks fell on Thursday after data showed a small decline in weekly jobless claims and a 2% drop in U.S. productivity in the fourth quarter.
Extending losses, the Dow Jones Industrial Average (DJI) declined 122 points, or 0.9%, to 13,864.
The S&P 500 (SPX) slipped 12.74 points, or 0.6%, to 1,499.44, with materials and consumer discretionary the biggest decliners among the index's 10 major industry groups.
The Dow ended Wednesday up 7.22 points, or 0.1%, at 13,986.52, with some earlier jitters in the session over European politics.
Thursday's dip in markets, however, is likely profit-taking and not connected to any one thing as investors sit on the sidelines waiting for a pullback to jump on buying opportunities, said Scott Wren, senior equity strategist at Wells Fargo Advisors.
"I don't think there's too much going on in terms of drivers, it's more just trading action," said Wren. In fact, Wren said the market is more likely "to grind a little higher" in the short term, expecting the eventual selloff to come at a higher level.
In Frankfurt, the European Central Bank left interest rates unchanged. ECB President Mario Draghi said in a news conference that the bank's accommodative monetary-policy stance should support growth, but that economic-recovery risks are skewed to the downside.
"We're seeing some wobbles in the euro zone, but that's not necessarily a U.S. concern," said Stephen Pope, managing partner at Spotlight Ideas. "U.S. corporations are showing robust growth and they're cash-rich. They are extraordinarily good value for money. It's a win-win for corporates and that's why you're getting a blend of markets powering higher."
Despite the bumps in the markets this week, Pope said he doesn't see any big panic button to press unless the Dow drops past the 13,500 level and the S&P 500 index drops to 1,445. "We've got plenty of fat on the bone here; there will be retracement, days of correction," he said. "The downside in these price movements are buying opportunities."
In the U.S., retailers reported same-store sales for January, with Macy's Inc. (M) reporting same-store-sales growth well above expectations.
The Nasdaq Composite Index (RIXF) fell 28.13 points, or 0.8%, to 3,140.35.
Hedge-fund manager David Einhorn said he opposes a proposal by technology giant Apple Inc. (AAPL) to eliminate preferred stock. Einhorn also said that his fund is long Apple shares and that the iPad maker is misvalued by the market. Shares of Apple rose 0.5%.
In other corporate news, Sprint Nextel Corp. (US-S) said its fourth-quarter loss widened but its revenue exceeded forecasts. Shares of the wireless carrier slipped 1.4%.
Shares of Akamai Technologies Inc. (AKAM) sank 15% after the company's quarterly revenue growth disappointed investors.
Green Mountain Coffee Roasters Inc. (GMCR) shares fell nearly 10% after the company projected downbeat sales growth for the current quarter. Einhorn told CNBC in an interview that he's still short the stock.
In addition to economic data, investors also parsed through comments from Chicago Fed President Charles Evans. In an interview with CNBC, Evans said he's optimistic the U.S. economy will improve and that the Fed's policies have done a lot of good already.
Evans, a member of the policy-making Federal Open Market Committee, was the first to call for the Fed to set a jobless-rate level that would need to be hit in order for the central bank to lift interest rates.
In economic news, jobless claims slipped to an adjusted 366,000 for the week.
Also, U.S. productivity declined by 2% in the fourth quarter, according to the Labor Department. .
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