Stocks Lose Ground, But Jobs, Manufacturing Data Offer Hope


FOX Business: The Power to Prosper

Stocks spent the penultimate trading day of 2010 in a remarkably narrow range, unable to gather further momentum despite evidence that the US economy is on solid footing entering the New Year.

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Of course, traders can be forgiven for being a bit tired after the stunning run equities have had this month. Indeed, as evidenced by the anemic volume, many of those traders weren’t even around for today’s action, a trend that will surely continue on New Year’s Eve tomorrow.

The Dow Jones Industrial Average closed with a loss of 15.67, or 0.14%, to 11569.71, the Nasdaq Composite eased 3.95, or 0.15%, to 2662.98, and the S&P 500 dropped 1.90, or 0.15%, to 1257.88. Oil lost ground, as did gold.

While trading volume has evaporated in the past several days, Thursday’s session brought a handful of key economic readings, and they were generally favorable.

The Labor Department said first-time jobless claims for the week ended Dec. 25 fell by 34,000, to 388,000, the first move below 400,000 since July 2008. The latest reading was far better than the drop of just 2,000 that economists were expecting. The four-week average, which economists like because it can smooth out week-to-week volatility, fell by more than 12,000 to 414,000, the lowest since August 1, 2008. However, continuing claims, or those that are paid out for more than a week, moved up by 57,000 to 4.13 million.

Whether or not those encouraging weekly numbers translate into a sustainable recovery in a job market that has been stuck in neutral for many months remains to be seen, but the report adds to other recent signs of economic recovery.

Meanwhile, the Chicago Purchasing Management Index report was universally positive. The overall PMI came in at 68.6 versus last month's 62.5 and expectations of 61, and the all-important new orders index rose to 73.6 compared with November's 67.2. Prices paid, deliveries and the employment components of the index all moved higher.

It was the highest overall reading on the Chicago PMI since July 1988.

Finally, the National Association of Realtors said pending sales of existing homes rose by 3.5% from October, to their highest level in seven months and better than the 1% or so that economists had projected. The latest reading was 5% below the year-ago level, however.

The report comes amid growing fears that the housing market may be on the edge of another pullback. Evidence of strength in the real estate market is tough to come by, and even much of that was the result of government-induced programs for buyers.

"In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market," said Lawrence Yun, the NAR’s chief economist. "But further gains are needed to reach normal levels of sales activity."

The stock market has certainly been on the side of the recovery camp, with equities poised to wrap up a phenomenal month. The S&P 500 closed Wednesday at its highest level in more than two years, and the 6.7% gain posted thus far in December would mark the best December in about 20 years. The index has gained ground in 17 of the last 21 trading days.

Corporate News

Sony (NYSE:SNE) filed a complaint with the U.S. International Trade Commission seeking to block LG Electronics and others from shipping certain patented smartphones and modems into the U.S.

The Japanese tech company filed the patent-infringement complaint late Wednesday to address the unlawful importation and sale into and within the U.S. of certain Sony mobile phones and modems covered by U.S. patents.

Lockheed Martin (NYSE:LMT) has been awarded a $3.6 billion contract by the U.S. Navy to build combat ships over the next five years.

The defense contractor received a fixed-price-incentive-fee contract to construct up to 10 Littoral Combat Ships, the first of which will be acquired this year at a contract value of $437 million. The rest will be acquired via options through 2015.

If all options are exercised, the total value of the ship construction will reach roughly $3.6 billion, according to Bethesda, MD-based Lockheed Martin.

U.S. oil and gas explorer Anadarko Petroleum (NYSE:APC) surged to a multi-year high Thursday after rumors resurfaced that BHP Billiton (NYSE:BHP) is mulling its purchase.

Britain’s Daily Mail reported that the Australian natural resource company, and the world’s largest miner, is preparing a $90-a-share bid to take over Anadarko.

Watch out Google (NASDAQ:GOOG), it looks like your smaller competitors are ready to strike back.

Local advertising provider and New York start-up Yext is teaming up with local sites such as Yelp, AOL’s (NYSE:AOL) MapQuest, Yahoo (NASDAQ:YHOO) and Citysearch in what is being characterized as an “anti-Google alliance,” according to media reports.

The rivals are looking to launch a program that targets local ads from businesses, similar to Google Tags, a free business listing with Google Places that enables users to find local businesses more easily. At $25-a-month, the tech behemoth allows businesses to link their Google search results with features such as restaurant menus and coupons.

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