News at a Glance
Broad Selloff: Major indexes thumped on jobs data, sales results.
Labor Woes: ADP Employment misses; weekly claims top consensus.
Retail Slumps: August sales disappoint; Wal-Mart shines again.
BoE Sticks: England's central bank leaves key rate at 5%.
The Lowdown
A rough month for retailers and more weakness in the labor market woke up the bears Thursday.
Stocks finished sharply lower on anemic monthly sales and new jobs data that suggested the nation's employment situation was still on the decline. Each of the major indexes gave back nearly 3% of their value. The Dow Jones Industrial Average lost 345 points to end the day at 11188. The Nasdaq dropped 75 to 2259, and the S&P 500 fell 38 to 1237.
Nearly every major sector posted substantial losses. Financials, materials and capital goods were the hardest hit. Techs, telecoms, transportation and energy stocks also recorded heavy losses. Consumer cyclicals, consumer staples and health care declined, as well.
The labor market got two bad signs Thursday. The ADP Employment report suggested private payrolls fell last month by more than economists were expecting. Separately, the Labor Department said the number of people filing for unemployment benefits for the first time came in well above market estimates. The August federal jobs report, a more comprehensive summary of the labor market that includes the unemployment rate, is scheduled to be released Friday.
With payrolls on the decline and food and energy prices still elevated, the retail sector continued to suffer last month. Many retailers reported disappointing same-store sales. Department stores Saks (SKS) and Nordstrom (JWN) saw their monthly sales slip. However, discount retailers continued to benefit from the slowdown. Wal-Mart (WMT) managed to beat sales estimates.
In other economic news, the Institute for Supply Management's reading on the services sector for August came in higher than expected.
Overseas, the Bank of England held its benchmark interest rate at 5% in the face of stagflationary pressures. Still, the FTSE finished down 2.5%. In Asia, Japan's Nikkei and Hong Kong's Hang Seng each finished about 1% lower.
Corporate News
AIG (AIG) is considering spinning off its riskiest credit-related assets into their own firm, The New York Post reported, citing anonymous sources. AIG's investments in bad debts have haunted the company's balance sheet for the last three quarters. The firm has enlisted JPMorgan Chase (JPM) to help create a separate entity for those securities.
Boeing (BA) dodged a labor strike when Washington Gov. Chris Gregoire urged representatives of the firm and the Machinists union to extend their contract for an additional two days to try to reach a deal, the Associated Press reported. The two sides had remained in stalemate after the union rejected what Boeing called "the best package of pay and benefits in the aerospace industry," a new deal that included raises, bonuses, benefits increases and cost of living adjustments worth an additional $34,000 per employee.
Toll Brothers (TOL) swung to a third-quarter loss on heavy write-downs and a sharp decline in revenue. Toll Brothers lost $29.3 million, or 18 cents a share, down from a net gain of $26.5 million, or 16 cents a share, in the year-ago period, the luxury home builder said. Chairman and chief executive Robert Toll cited "pent-up demand" and saw signs that business was "stabilizing," even as the firm projected lower revenues for the current quarter.
The Economy
Private payrolls fell by 33,000 in August, down from a revised July gain of 1,000, according to the latest ADP Employment data. Economists had expected the economy to have lost 30,000 private-sector jobs last month. REPORT
Initial jobless claims rose to 444,000 last week, up from a revised 429,000 in the prior week, the Labor Department said. Economists had predicted the number of people seeking unemployment benefits for the first time would come in at 420,000. REPORT
Second-quarter productivity growth was revised to 4.3%, up from an earlier estimate of 2.2%, the Labor Department said. Economists had expected an upward revision to 3.5%. In the first quarter, productivity grew by a revised 2.3%. REPORT
The Institute for Supply Management's Purchasing Manager's Index for the services sector rose to an August reading of 50.6%, up from 49.5% in July. Economists had predicted the index would remain unchanged. REPORT
Crude inventories report fell by 1.9 million barrels last week, however they remained in the middle of the average range for this point in the year, the Energy Department said.
ReadMe
Newsweek on the economy: The nation's underlying economic problems may not be solvable for its next president. STORY
Forbes on bankruptcy: Filings are likely to increase over the next year. Here is what you need to know about Chapter Seven. STORY
The Los Angeles Times on Spain: A look at who is being affected by the country's economic recession. STORY
WatchMe
Bloomberg on oil: T. Boone Pickens, the founder and chairman of BP Capital, says crude prices are likely to rebound to $150 in the near-term. VIDEO
CNBC on the market: Clem Chambers, chief executive of ADVFN, predicts another sharp downturn by January. VIDEO
NFL Kickoff: Redskins at Giants: Sure, you could watch Sen. John McCain (R-Ariz.) accept his party's nomination for the presidency, but we already know how that's going to turn out. On the other hand, the first game of the NFL season pits a group of Beltway insiders against a team of incumbents, and it's is still anybody's contest. NBC, 7 p.m.
-0.03
0.23
