US stocks were mixed today as investor enthusiasm over a sharp drop in initial unemployment claims was offset by rising oil prices.
Technology shares benefited from a pair of outlook upgrades and strong earnings from National Semiconductor.
Investors grew more cautious through the session as oil prices climbed, topping the $44 per barrel mark after weeks of declines. A barrel of light crude rose $1.84 to settle at $44.61 a barrel on the New York Mercantile Exchange.
Wall Street was also disappointed by the Commerce Department’s report on wholesale stock lists, which rose 1.3% in July, double what economists had expected.
Wholesale sales rose by only 0.5% – which means that business and consumer spending has trailed off and more products are sitting in warehouses.
“We’re starting to see some real evidence of softness in consumer spending,” said Russ Koesterich, US equity strategist for State Street Corp in Boston.
“I don’t think the economy is falling off a cliff. It’s chugging along at a moderate pace, but will it be enough to keep corporate profits where they need to be? That’s the question.”
Improvements in the US’s job picture could help spur consumers. The Labour Department reported 319,000 new unemployment claims for the past week, down 44,000 from a week ago. It was the lowest level of first-time claims since July.
The Dow Jones industrial average was down 24.26, or 0.2%, at 10,289.10.
Broader stock indicators were markedly higher. The Nasdaq composite index was up 19.01, or 1%, at 1,869.65, while the Standard & Poor’s 500 index gained 2.11, or 0.2%, to 1,118.38.
The economic data will probably weigh heavily on the Federal Reserve as it prepares to meet on September 21 to discuss another hike in the nation’s benchmark interest rate, which currently stands at 1.5%.
The improved jobs picture increases the chances that the Fed will raise rates by a quarter percentage point, even though raising rates in the midst of an election can sometimes weigh on the presidential incumbent.
While Fed Chairman Alan Greenspan was optimistic about the economy’s strength in his congressional testimony on Wednesday, Wall Street took a more cautious view, waiting to see how the summer’s economic slowdown will affect third- and fourth-quarter earnings.
Tech stocks, battered this summer after a series of disappointing earnings reports, were buoyed by a rare spate of good news. Nokia jumped $1.06 to $13.77 after the Finnish maker of cellular phones raised its sales and profit outlooks for the current quarter.
The company cited stronger demand for multi-function mobile devices.
Texas Instruments said it expected its third-quarter earnings to come in above the middle of its previous estimate range. The chip maker, while warning that sales could fall below its past outlook due to low demand, nonetheless gained $1.94 to $20.77.
During the session, National Semiconductor reported a 29% jump in sales, beating Wall Street estimates by 5 cents per share, but added that profits for the current quarter would likely fall 8 to 10% in comparison. National Semiconductor closed 52 cents higher at $12.52.
Procter & Gamble confirmed that its earnings were on target for the 72 cents per share forecast by analysts. The consumer products maker said profits would grow at least 10% for the current quarter.
Procter & Gamble fell 64 cents to $56.09.
Advancing issues outnumbered decliners by more than three to two on the New York Stock Exchange, where volume totalled 1.36 billion shares, compared to 1.25 billion on Wednesday.
The Russell 2000 index of smaller companies was up 8.39, or 1.5%, at 566.18.