US stocks end lower for third straight day

Disappointing economic data and cautionary statement from Cisco Systems weigh on stocks

Disappointing economic data and cautionary statement from Cisco Systems dragged US stocks lower for third straight day at Wall Street on Thursday, 12 August 2010. Initial claims data checked in earlier during the day. The Dow kicked off the day sharply lower but then managed to erase its loss partly throughout the day. Cisco Systems weighed heavily on the tech heavy Nasdaq. Stocks continued to bleed for the entire day once again. The dollar spiked up heading to its highest level in more than a month leading to lower commodity prices.



For the day, that ended on Thursday, 12 August 2010, Dow ended lower by 58.88 points at 10,319.99. Nasdaq ended lower by 18.36 points at 2,190.27. S&P 500 ended lower by 5.86 points at 1,083.61. Dow was trading lower by 75 points earlier during the day.

Seven out of ten economic sectors ended lower today led by industrial, technology, and financial sectors. Telecom, materials, and healthcare sectors ended higher. Cisco Systems led the pack of Dow decliners shedding more than 7%.

In the currency market on Thursday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.4%.

The Labor Department in US reported on Thursday, 12 August 2010 that the number of initial claims for regular state unemployment insurance benefits rose 2,000 to 484,000 in the week ended 7 August. It reached the highest level since February. Market had expected a level of 463,000.

The four-week average of initial claims, a more accurate gauge of employment trends, rose 14,250 to 473,500, also the highest level since February. For the prior week, the initial claims level was revised higher to 482,000 from a previous estimate of 479,000. The number of workers who continued to receive state unemployment checks fell by 118,000 to 4.45 million in the week ended 31 July. The four-week average of these continuing claims fell 64,500 to 4.52 million.

In addition, the Labor Department in US reported on Thursday, 12 August 2010 that prices of goods imported into the United States increased 0.2% in July, after two months of declines. Fuel-import prices rose 2.1% in July, while prices for non-fuel imports fell 0.3%. Import prices are up 4.9% in the past year, with a gain of 14.8% for fuel imports, and a 2.8% increase for non-fuel imports. Export prices fell 0.2% in July, including a 0.1% decline for agriculture exports, and a 0.2% decline for non-agricultural exports. In June, export prices were down 0.7%. For the year, export prices are up 3.9%.

Among earning reports expected for the day, a tepid revenue forecast from Cisco overshadowed its better-than-expected bottom line and caused a barrage of selling in the tech sector. That weighed heavily on the tech-rich Nasdaq, which lagged its counterparts all day.

Crude oil prices ended substantially lower on Thursday, 12 August 2010. Prices fell to one-month low as the dollar strengthened and economic data disappointed. On Thursday, crude oil futures for light sweet crude for September delivery closed at $75.74/barrel (lower by $2.28 or 2.9%).

Also on Thursday, natural-gas futures closed at their lowest in 10 weeks, with the September contract declining 3 cents, or 0.7%, to $4.296 per million British thermal units. The Energy Information Administration reported a rise of 37 billion cubic feet in the week ended 6 August against an increase between 32 to 36 billion cubic feet.

Bullion metal prices ended higher on Thursday, 12 August 2010 at Comex. Prices rose despite a strong dollar after initial claims data checked in worse than expected at Wall Street thereby increasing the appeal of precious metals as an alternate investment vis a vis equities. On Thursday, gold for December delivery ended at $1,216.7 an ounce, higher by $17.5 (1.5%) on the New York Mercantile Exchange. September Comex silver futures ended higher by 16 cents (0.7%) at $18.07 an ounce.

Trading volume remains unimpressive as barely 1 billion shares traded hands on the NYSE. Volume on the NYSE has averaged just 955 million shares for the past 10 sessions.

Indian ADRs ended mixed on Thursday. Patni Computers and Tata Motors soared 4% and 1.4% respectively. WNS dropped 2.3%.

For tomorrow, the consumer price index and retail sales data are the main economic data expected. Other than that, earning reports will continue to trickle in.