U.S. Stocks Extend Losses As Financials Falter, Oil Rises
NEW YORK (MarketWatch) -- U.S. stocks on Thursday slumped sharply lower for the first day in three as oil prices rose, unemployment filings hit six-year highs, American International Group Inc. posted a multibillion-dollar loss and Wal-Mart Stores Inc.'s sales cast a pall.
"Weekly jobless claims have not been kind of late [and] Wal-Mart's same-store sales are a disappointment, which is raising some concerns about the consumer's health," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
Near its session low, the Dow Jones Industrial Average fell 169.60 points to 11,486.47.
Of the blue-chip benchmark's 30 components, 23 were trading in the red, the losses paced by AIG -- down 17.2%. Late Wednesday, the insurance giant reported $5.36 billion in mortgage-related losses.
Technology shares fronted the Dow's gainers, with Intel Corp. recently up 5.3% and Microsoft Corp. ahead 2.3%.
The S&P 500 Index shed 17.4 points to 1,271.78, with all but two of its 10 industry groups on the decline, led by the financial sector, off 4.3%, and consumer discretionary, down 1.9%.
Beyond AIG, Fannie Mae and Freddie Mac were among the hardest-hit shares, with the mortgage buyers down 13.7% and 12.2%, respectively.
Telecommunication services and utilities led sector gains on the S&P, both up fractionally.
After flirting in positive turf for a portion of the session, the Nasdaq Composite Index shifted back to negative territory, sliding 13.62 points to 2,364.75.
September crude closed at $120.02 per barrel on the New York Mercantile Exchange, up $1.44, or 1.2%, for the session. The market ended its losing streak as a threat to global oil supplies in the wake of a pipeline shutdown outweighed ongoing concerns that high oil prices are slowing demand. .
"Despite supply concerns following a pipeline explosion in Turkey, sources say the dollar index's move to five-month highs has been the main driver in N.Y. trade on Thursday," said analysts at Action Economics of crude's price action.
Retail trouble
Helping set Thursday's tone, the Labor Department reported the number of workers making first-time filings for unemployment benefits last week climbed to 455,000, the highest level in more than six years.
Along with the lackluster data, retailers deepened investors' gloom, with most reporting worse sales than forecast for July. Wal-Mart , the world's largest retailer, ranked among those missing analysts' targets for same-store sales.
The major stock indexes had pared some of their losses after data pointed to a possible strengthening in the U.S. housing market in coming months. The National Association of Realtors reported its index of sales contracts on previously owned U.S. homes rose 5.3% in June from the prior month. .
"While we believe home sales are close to a bottom, home prices have further to fall," said Michelle Meyer, an economist with Lehman Brothers.
Overseas, the Bank of England and the European Central Bank both held rates unchanged.
European shares edged higher, with the pan-European Dow Jones Stoxx 600 index up 0.2% to 288.27. .
But overnight in Asia, stocks closed on a mostly weak note, with Japan's Nikkei 225 Average down 1%. .
On Wednesday, U.S. stocks ended higher for a second consecutive session as a decline in the price of crude helped offset an $821 million loss for Freddie.
By Kate Gibson