U.S. Stocks Down As Investors Weigh Data, Weak Forecasts

NEW YORK (MarketWatch) -- U.S. stocks detoured lower again Thursday as investors considered a rise in weekly jobless claims and weak forecasts from Applied Materials Inc. and retailer J.C. Penney Co.

"The market is trying hard to find sea legs after getting buffeted around both on the up and down sides. In a period of volatility, at least for today, the market is taking a breather," said Paul Nolte, director of investments at Hinsdale Associates.

Trading in a 90-point range that had the Dow crossing briefly into positive territory, the Dow Jones Industrial Average was recently off 31.7 points to 13,199.3; of the Dow's 30 components, 16 were lower.

The S&P 500 Index fell 8.04 points to 1,462.54 while the Nasdaq Composite Index dropped 12.66 points to 2,631.66.

"Credit woes continue to weigh, along with weak corporate forecasts," said Peter Cardillo, chief market economist at Avalon Partners.

Oil and natural-gas stocks gave ground after inventory levels rose unexpectedly and oil prices fell, with crude futures down, dropping $1.44 to $92.65 a barrel. .

The Amex Natural Gas Index fell 1%, while the Amex Oil Index was down 1.8%. .

Volume on the New York Stock Exchange reached 636 million, as declining stocks overtook those advancing by nearly 3 to 1. On the Nasdaq, more than 1.1 billion shares traded, and decliners topped advancers, 2 to 1.

Fed factor

In early data, the government reported a 0.3% increase in the consumer-price index in October, with a 1.4% gain in energy prices fueling the rise. The core CPI, which excludes food and energy costs, gained 0.2% in October.

Both numbers were as expected.

"The core rate of inflation now is above the Fed comfort level," said Cardillo of market worries that increased inflation might stop the Federal Reserve from cutting interest rates again, when policy makers meet in December.

In separate data, the Labor Department reported that first-time jobless claims last week jumped 20,000 to 339,000, more than had been expected.

"The trend in jobless claims has begun to show worrisome traits indicative of a weakening in labor-market conditions that if continued would be indicative of economic recession," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co.

Later indicators illustrated resilient factory activity in the Philadelphia and New York regions in November. .

On the New York Mercantile Exchange, gold futures fell sharply, dropping $27 to $787.7. .

Bond yields also fell, with the benchmark 10-year note up 10/32 to 100 9/32, its yield slipping to 4.215%. .

Issues in action

In earnings, J.C. Penney Co. posted a 9.1% drop in third-quarter profit and cut its outlook for the fourth quarter as well as the full year.

Applied Materials Inc. reported revenue in the current quarter could drop as much as 18% due to weak corporate demand for memory chips.

Barclays PLC became the latest bank to disclose credit-related write-downs, with the company on Thursday saying that it would write off $2.7 billion.

A General Electric Asset Management bond fund in GE's pension program is offering external investors redemption of the bond below par after losses in mortgage-backed securities, with the move tied to spreading losses in the subprime-mortgage market. .

GE shares fell 1%.

Foreign exchange

Overseas, European shares dropped sharply. .

In Asia, stock indexes mostly fell, with stocks in Tokyo, Shanghai, Hong Kong, Sydney, Taiwan and Seoul, South Korea unable to sustain an early advance.

By Kate Gibson