Wall Street Reacts Calmly to more Bad News

The Wall St. street sign is photographed in front of the American flag hanging on the New York Stock Exchange prior to a NYC Central Labor Council rally for worker protections, Thursday, Sept. 25, 2008 in New York. (AP Photo/Mary Altaffer)
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NEW YORK – Wall Street showed further signs of stability Thursday as investors calmly took in a flurry of downbeat economic and corporate data and largely held on to the gains they've made for more than a week.

The major stock indexes were fluctuating in a relatively tight range. The market, which has closed higher in seven of the last eight sessions, appeared to largely take in stride discouraging retail sales reports Thursday and big job cuts at AT&T Inc. and DuPont Co. as well as a weaker-than-expected profit forecast from the drug maker Merck.

Investors showed little reaction to calls by Federal Reserve Chairman Ben Bernanke for the government to increase efforts to stop soaring home foreclosures.

Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, said traders have become somewhat more immune to the parade of terrible economic data since the market's two-day plunge on Nov. 19 and 20 that wiped 873 points, or 10.6 percent, from the Dow Jones industrials. He contends the bad readings have been built into many investors' expectations.

"The mind-set has changed a little. You just don't have that panic selling all day," he said.

The mostly moderate moves, with the exception of a huge sell-off Monday, have led some analysts to believe that some order may be returning to the market after months of extreme volatility.

"I think you're just going to have down 100, up 200 days," Rovelli said, calling 300-point and 400-point moves in a day less likely as Wall Street becomes more accustomed to horrible economic reports.

But Wall Street still faces a great deal of uncertainty — for example, plunging consumer spending levels — that are still expected to set off volatility in the weeks and months ahead. Sales reports issued Thursday showed that retailers suffered a miserable November, deepening fears that the critical holiday period could be the most dismal in decades.

The Labor Department's November employment report could, if it's worse than expected, send stocks falling sharply when it is released on Friday. The market is well aware that consumers who aren't working don't spend, and that consumer spending accounts for more than two-thirds of economic growth.

In late morning trading, the Dow Jones industrial average rose 31.46, or 0.37 percent, to 8,623.15.

Broader stock indicators also rose modestly. The Standard & Poor's 500 index rose 4.19, or 0.48 percent, to 874.93, and the Nasdaq composite index rose 7.92, or 0.53 percent, to 1,500.30.

The Russell 2000 index of smaller companies rose 7.54, or 1.66 percent, to 461.30.

The number of stocks rising on the New York Stock Exchange outpaced those declining by about 8 to 7. Volume came to a moderate 397.6 million shares.

On Wednesday, Wall Street looked past another stream of bad economic news and finished sharply higher after fluctuating between positive and negative territory for most of the day.

Bond prices showed investor demand remains elevated. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.66 from 2.67 percent late Wednesday.

The yield on the three-month T-bill, considered one of the safest investments, fell to 0.01 percent from 0.02 percent late Wednesday.

The dollar was mixed against other major currencies, while gold prices fell.

Investors also were awaiting news on the Detroit automakers. Heads of the companies appeared before Congress with hopes of persuading skeptical lawmakers to save their troubled industry. General Motors Corp., Ford Motor Co. and Chrysler LLC are collectively seeking $34 billion in emergency aid.

While it might not come easily from Capitol Hill, investors largely expect some sort of resolution for the ailing companies.

Among the economic data arriving Thursday, the Labor Department said new claims for jobless benefits fell unexpectedly last week but the number of people continuing to receive government aid reached a 26-year high.

The Commerce Department said factory orders plunged by 5.1 percent in October. It was the steepest decline in eight years.

Retail stocks largely advanced even the companies posted huge sales declines for November. The Goldman Sachs-International Council of Shopping Centers sales index fell 2.7 percent to its lowest reading since its inception in 1969. Expectations had been so low that investors appeared relieved that the month was over and that the sales reports were in hand.

Macy's Inc. said its same-store sales, or sales at stores open at least a year, fell 13.3 percent. Same-store sales are a key measure of a retailer's health. Macy's advanced 39 cents, or 5.3 percent, to $7.78.

Target Corp. said its same-store sales for the month to fall 10.4 percent. The stock rose 23 cents to $34.71.

The sales declines at both companies were bigger than Wall Street had forecast.

Many shoppers looking for discounts turned to Wal-Mart Stores Inc. The world's largest retailer posted a better-than-expected 3.4 percent increase in sales. In the U.S., grocery sales helped results. Wal-Mart rose $1.03, or 2 percent, to $55.41.

AT&T slipped 24 cents to $28.84 after reporting it is cutting 12,000 jobs, or about 4 percent of its work force, because of the economic downturn.

Chemicals maker DuPont said it will cut 2,500 jobs, mostly serving the U.S. and European automotive and construction markets, due to lower demand. DuPont rose 21 cents to $23.82.

Meanwhile, Merck & Co. said its profit will fall in 2009 due to restructuring costs, generic competition and slower sales of key products. Its forecast was below Wall Street estimates for next year. Merck fell 62 cents, or 2.3 percent, to $25.84.

Light, sweet crude fell 65 cents to $46.14 a barrel on the New York Mercantile Exchange. Crude, which soared to a record $147.27 in July, is now trading at its lowest levels in four years, having plunged in response to the weakening global economy.

Overseas, Japan's Nikkei stock average fell 1.00 percent. In afternoon trading, Britain's FTSE 100 rose 0.30 percent, Germany's DAX index rose 1.00 percent, and France's CAC-40 fell 0.28 percent.