Tag - Fo

Small-cap stocks took a hit Thursday, snapping a string of four consecutive winning sessions with a resounding downside spiral as dreary economic data and lousy corporate profit reports triggered a wave of selling. The Russell 2000 (NYSE:IWM) tumbled 19.78, or 4.18%, to 453.24, and is now down 9.2% for the year. The Dow is now down 7.1% for 2009, while the S&P 500 is off 6.4%.

Just one day after generating the second-biggest rally of the year, the Russell slumped to the third worst daily decline, reminiscent of the roller coaster ride surrounding the Obama inauguration, which saw the best and worst days of 2009 in back-to-back fashion. It has become a familiar and uncomfortable trendless volatility as the market waffles between bargain hunting and renewed dread about the worst economic recession since the Great Depression 70 years ago.

Today’s big event was a trio of economic reports that stood to remind us all that even though data might be a “lagging” indicator for stocks, when the numbers get numbingly awful, the confidence to shrug them off starts to wane. This morning saw weekly unemployment claims rise to 588,000, which was slightly above the forecast. But it wasn’t the weekly figure that was troubling, it was the number of Americans forced to file for continuing unemployment benefits because they can’t find a job. That number swelled to 4.77 million, the highest number on record. There are now more people than ever before forced to draw unemployment insurance, and we’re supposedly not yet at the worst of the jobs situation.

“In addition to staggering layoff announcements in January across a wide spectrum of firms, the actual number of folks filing for unemployment insurance climbed 3,000 during the week ended Jan. 24. Continuing claims, which lag initial claims by one week, advanced to 4.776 million and the insured unemployment rate increased to 3.6%, which is a cycle high from 3.4% in the prior week. The January employment report is likely to show a grimmer picture of the labor market compared with the December data,” Asha Bangalore, economist with Northern Trust, said in an email. 

And while the weekly claims report alone was an uncomfortable piece of data, there was no relief to be found in the monthly durable goods report or the latest reading on new home sales. Durable goods orders declined for the fifth consecutive . . .

Small-cap stocks pushed lower on the opening, pressured by a sloppy batch of earnings reports this morning and another weak slate of economic reports that threatens to break a four-day winning streak for the market. At 10:02 a.m. ET, the Russell 2000 (NYSE:IWM) was down 11.00, or 2.32% at 462.03.

New home sales fell off a cliff today, sinking 14.7% to an annual rate of 331,000 units, way below the forecast of 400,000. The stock market appeared to extend the morning slide after the dreary home sales report.

The weekly claims report came in at 588,000, which was a tad higher than the forecast. The bleak news was on continuing claims, which rose to record highs at 4.77 million, topping the recessions from the 1970s and 1980s in the process. This was a sobering look at recent layoffs ahead of the big monthly employment report next week.

Also on the data front, the durable goods report came out at minus 2.5%, which was nominally worse than the projection for a decline of 2%. However, when stripping out the “big ticket” transportation orders, durables were off 3.6%. This marked the December report on durable goods; for the year, orders were down more than any year since 2001.

As for the latest earnings reports, Allstate Corp. (NYSE:ALL), QUALCOMM Inc. (Nasdaq:QCOM), Black and Decker Corp. (NYSE:BDK) and Fortune Brands Inc. (NYSE:FO) all posted various troubling numbers on profit reports, setting a bleak tone for the morning, just a day after investors were finding spots of good news on the profit front for buying enthusiasm.

Interestingly, all the bleak news on earnings and economic data shuttled aside excitement over the House passage of the Obama stimulus plan; but even before today’s data, the market was already lower, suggesting that the House passage wasn’t a surprise and that the market would need something fresh to . . .

Small-cap stocks are expected to open sharply lower today, pulled down by firm crude oil prices, the ongoing credit crisis and safe-haven flows away from stocks. The Russell 2000 (NYSE:IWM) was off about 1% in overnight trading, which would suggest an open near 683. The technical definition for a bear market designation is a 20% decline off the highs, and that number is at 685.18 for the Russell.

Crude oil prices were up about $2 dollars in European trading, climbing back to $142 dollars a barrel, which keeps heat on equity markets that are sensitive to energy input costs. In addition, the quick recovery move takes some edge off the argument for a topping pattern when the market pulled back off fresh record highs Monday.

In overnight trading, Fortune Brands (NYSE:FO) tumbled more than 5% as the company lowered guidance because of the sluggish U.S. economy.

Stock indices around the world were in a selling mood overnight, with European shares down about 2% heading toward the U.S. open. European banks were hit hard, with UBS sinking 6% to 10-year lows amid the credit crunch. India shares were . . .