Stocks Waver, With Hard-to-Read Signs On Economy
EW YORK (AP) - The stock market has the summer doldrums.
U.S. stocks dawdled between small gains and losses Thursday morning, as investors were unable to decide what to focus on: incremental encouraging news about the U.S. economy, or incremental worrisome news about China and elsewhere.
By mid-morning, the Dow Jones industrial average was up nine points. It has barely budged for most of the week, rising each day but only by the tiniest fractions of a percent. Part of the reason is the absence of major developments in the European debt crisis or decisive news on the U.S. economy. And part of the reason for the relative quiet is that traders like to clear out for vacation in August.
"I think there are more active managers in the Hamptons then there are in Manhattan," said Hugh Johnson, chairman and chief investment officer of Hugh Johnson Advisors in Albany, N.Y.
At mid-morning, the Dow Jones was trading at 13,189, up just 0.07 percent from the day before. Changes in the other major stock indexes were equally underwhelming. The Standard & Poor's 500 was up less than three points at 1,405, a gain of 0.2 percent. The Nasdaq was up nine points, or 0.3 percent, at 3,020.
The market, trendless and mercurial, had to digest conflicting news about the economy.
In the U.S., the government reported that the trade deficit fell to the lowest level in 18 months. The trade deficit is the gap between how much the U.S. imports and the amount that it exports. A lower deficit is generally considered good for the economy. In June, the U.S. paid less for the oil it brought in and enjoyed higher sales overseas of its autos, pharmaceuticals and industrial machinery.
But a troubling trend was buried in the report: Exports to China dropped more than 4 percent. That's a concern because China, the world's second-largest economy, has been a major driver of the global economy throughout the recession and its aftermath, even as other countries stumbled. U.S. exports weren't the only sign that China can't grease the world economy's skids forever. Separately, China reported that growth slowed in auto sales and factory output.
China's government has shown that it's worried about the situation. It has cut interest rates twice since the start of June to try to spur lending and borrowing, and it is pumping money into the economy through more spending on public works.
The U.S. also reported weekly jobless claims, but the results weren't much to hang onto. The number of Americans applying for unemployment benefits fell slightly last week. However the average for the past four weeks, generally a more reliable indicator, rose slightly.
The second-quarter corporate earnings season, when U.S. companies report how much money they lost or made, is winding down. Wendy's rose in early trading after reporting higher revenue, but it was flat by mid-morning. Tim Hortons, the Canadian coffee-and-doughnut chain, fell despite reporter higher revenue and net income. In the morning, it was down $1.39 to $51.19.
Online brokerage E-Trade jumped 6 percent after unexpectedly firing its CEO. The reasons for the dismissal weren't immediately clear. E-Trade's stock rose 52 cents to $8.54.
Ominous signs out of Europe continued to hang over the market: The chairman of Cyprus's Laiki Bank, which the government has propped up, stepped down after the country's central bank governor asked him to.
Germany's Commerzbank predicted lower profits for the rest of the year, saying its customers are too nervous to invest or take out loans. And Greece reported that unemployment soared to 23 percent in May from 17 percent in the same month a year ago. Among people under 25 years old, 55 percent are out of work.