S&P 500 ends at record on jobless data

New York - US stocks mostly rose on Thursday, with the S&P 500 closing at yet another record on better-than-expected jobless claims data and the European Central Bank's move to keep rates unchanged.

But the overall sentiment was cautious ahead of Friday's all-important US nonfarm payrolls report and tensions between Ukraine and Russia.

The CBOE Volatility Index or VIX, Wall Street's so-called fear gauge, ended up 2.3 percent at 14.21.The VIX generally moves inversely to the performance of the S&P 500 and is often used to hedge against a market decline.

Trading volume was also lower than average, with about 6.4 billion shares traded on US exchanges, according to data from BATS Global Markets, below the daily average of about 7 billion in the past month.

“We had a bit of a selloff in midday session and late afternoon, but the fact the S&P 500 managed to set another record shows how much resistance this market has to geopolitical overhang that is clearly not over, resistance to bad news,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

Thursday's milestone marked the S&P 500's fourth record closing high over the past six sessions.

Weekly applications for US unemployment insurance fell to 323,000, the lowest in three months, a sign of strength in a labour market that has been hobbled by severe weather. New orders for US factory goods, however, fell more than expected in January and shipments also slipped, adding to signs of a recent slowdown in manufacturing activity.

Friday's nonfarm payrolls report, due at 8.30am EST (13h30 GMT), is likely to show job growth in the United States picked up enough in February to encourage the Federal Reserve to continue scaling back its monetary stimulus. But the gain was likely to be tepid, given the unrelentingly harsh winter.

The day's biggest gainers were stocks in basic materials, financial and industrial sectors, often associated with strong economic fundamentals. The S&P basic materials index was up 0.4 percent, the S&P financial index was up 0.7 percent and the S&P industrials index was up 0.6 percent.

But the Nasdaq 100 fell 0.2 percent, led lower by Staples, which lost 15.3 percent to $11.35. The largest US office supplies retailer forecast a decline in sales. Staples also said it would close up to 225 stores in the United States and Canada by 2015.

The Dow Jones industrial average rose 61.71 points or 0.38 percent, to end at 16,421.89. The S&P 500 gained 3.22 points or 0.17 percent, to finish at 1,877.03. The Nasdaq Composite dropped 5.848 points or 0.13 percent, to close at 4,352.125.

Crimea's parliament voted to join Russia and its Moscow-backed government set a referendum for 10 days' time on the decision in a dramatic escalation of the crisis in the Ukrainian Black Sea peninsula.

US President Barack Obama took steps to punish those involved in threatening Ukraine while European Union leaders agreed to suspend visa and investment talks with Russia.

An index of Moscow stocks lost more than 2 percent after the vote in Crimea, but pared the losses and closed down 1 percent. The rouble weakened 0.3 percent versus the US dollar. A US-traded Russian ETF fell 1.1 percent to $23.37.

The European Central Bank decided not to take any action at its meeting on Thursday because economic and monetary conditions had not changed enough to warrant it. The euro hit its highest level against the US dollar since late December.

Among individual stocks, Costco Wholesale dropped 2.8 percent to $113.26 after the warehouse retailer reported a bigger-than-expected 15 percent decline in quarterly profit as unusually deep discounting in the holiday shopping season hurt margins. - Reuters

News Source: www.iol.co.za

Read More

U.S. jobless claims at three-month low

A job-seeker completes an application at a career fair held by civil rights organization National Urban League as part of its annual conference, in Philadelphia July 25, 2013.

(Reuters) - The number of Americans filing new claims for unemployment benefits fell more than expected and hit a three-month low last week, a sign of strength in a labor market that has been hobbled by severe weather.

Other data on Thursday showed a second straight month of declines in new factory orders in January, likely as harsh weather disrupted activity in some regions of the country.

Initial claims for state unemployment benefits dropped 26,000 to a seasonally adjusted 323,000, the Labor Department said on Thursday. That was the lowest level since the end of November and the drop more than unwound the prior week's rise.

"Initial claims returned to a more normal level, consistent with a healthy labor market turnover," said Yelena Shulyatyeva, an economist at BNP Paribas in New York.

Economists had forecast first-time applications for jobless benefits falling to 338,000 in the week ended March 1.

The four-week moving average for new claims, considered a better measure of underlying labor market conditions as it irons out week-to-week volatility, slipped 2,000 to 336,500.

The claims data has no bearing on Friday's employment report for February as it falls outside the reference period for the survey. While unseasonably cold weather has dampened hiring in recent months, the drop in new filings for jobless benefits suggests labor market fundamentals remain strong.

Nonfarm payrolls are forecast to have increased by 150,000 jobs in February, according to a Reuters survey of economists, up from the weather-depressed gains of 113,000 in January and 75,000 in December.

Freezing temperatures have also weighed on home building and appeared to be a drag on manufacturing as well.

In a separate report, the Commerce Department said new orders for manufactured goods declined 0.7 percent after falling 2.0 percent in December. Shipments fell for a second straight month in January.

Factory activity is also being held back as businesses place fewer orders while working through stocks of unsold goods accumulated in the second half of 2013.

Factory orders fell across most categories in January, with big declines in transportation, primary metals and electrical equipment, appliances and components. Orders for machinery also fell.

SLOWER PRODUCTIVITY

A second report from the Labor Department suggested businesses would probably need to step up hiring to maintain output, after productivity in the fourth quarter was revised down sharply.

Productivity rose at a 1.8 percent annual rate instead of the previously reported 3.2 percent pace. Productivity, which measures hourly output per worker, increased at a 3.5 percent pace in the third quarter.

"Slower productivity might push employers to boost hiring," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

Economists had expected fourth-quarter productivity growth would be revised down to a 2.5 percent rate. Part of the weakness in productivity reflects sluggish economic growth.

The government last week cut its estimate of fourth-quarter gross domestic product growth to an annual pace of 2.4 percent from the previously estimated 3.2 percent rate.

For all of 2013, productivity increased 0.5 percent rather than 0.6 percent. That was the smallest gain since 1993 and compared to a 1.5 percent rise in 2012.

Unit labor costs - a gauge of the labor-related cost for any given unit of output - fell at a revised 0.1 percent rate in the fourth quarter, still showing weak wage-related inflation pressures in the economy. They had previously been reported to have dropped at a 1.6 percent rate.

Unit labor costs declined at a 2.1 percent rate in the third quarter. They were up 1.1 percent in 2013, the weakest reading since 2010.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

News Source: www.reuters.com

Read More