Stock Market Suffers Jobs Report Hurt

Stocks slip Thursday on disappointing economic reports.

Although the Dow Jones Industrial Average managed to hit new record intraday and closing highs on Thursday, stocks generally declined in the wake of an awful report on initial unemployment claims from the Department of Labor. Initial claims for the week ending December 14 climbed by 10,000 to a dismal, 379,000. The four-week moving average climbed by 13,250 to 343,500.

The National Association of Realtors reported that existing home sales declined 4.3 percent in November to a seasonally-adjusted annual rate of 4.90 million. Economists were expecting a SAAR of 5.04 million. The Dow Jones Industrial Average (NYSEARCA:DIA) picked up 11 points to finish Thursday’s trading session at a record-high close of 16,179.08 for a 0.07 percent advance, after hitting a record intraday high of 16,194.72. The S&P 500 (NYSEARCA:SPY) dipped 0.06 percent to close at 1,809. The Nasdaq 100 (NASDAQ:QQQ) declined 0.31 percent to finish at 3,498. The Russell 2000 (NYSEARCA:IWM) fell 0.73 percent to end the day at 1,125.

On London’s ICE Futures Europe Exchange, February futures for Brent crude oil advanced 53 cents (0.48 percent) to $110.16/bbl. (NYSEARCA:BNO). February gold futures declined $45.90 (3.72 percent) to $1,189.10 per ounce (NYSEARCA:GLD). Transports were moving ahead through snowbound traffic on Thursday, as the Dow Jones Transportation Average (NYSEARCA:IYT) crept forward by 0.04 percent.

In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks advanced as the yen weakened to 104.13 per dollar during the last hour of Thursday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (NYSEARCA:FXY).

Panasonic shares skyrocketed 2.54 percent on the Tokyo Stock Exchange. The Nikkei 225 Stock Average jumped 1.74 percent to 15,859 (NYSEARCA:EWJ).

Stocks extended their losing streak in mainland China to an eighth day as liquidity concerns continued to spook investors. Since the government has changed its policy to allow the markets to have more control over interest rates, loans have become more expensive. The seven-day repo rate is at a six-month high. The Shanghai Composite Index fell 0.95 percent to 2,127 on thin trading volume (NYSEARCA:FXI). Hong Kong’s Hang Seng Index sank 1.10 percent to end the day at 22,888 (NYSEARCA:EWH).

In Europe, stocks soared after an agreement was reached among European Union finance ministers for developing a resolution authority and a protocol for closing banks considered too weak to survive. The measure must be approved by the European Parliament. The Euro STOXX 50 Index finished Thursday’s session with a 1.88 percent jump to 3,031 — crossing above its 50-day moving average of 3,024. Its Relative Strength Index is 54.76 (NYSEARCA:FEZ).

Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,771 after retreating 0.06 percent to finish Thursday’s session at 1,809.60. Its Relative Strength Index declined from 60.48 to 59.95. The MACD is continuing to climb toward the signal line, which would suggest that the S&P should advance during the immediate future.

On Thursday, four sectors advanced and five sectors declined. The utilities sector took the hardest hit, falling 0.73 percent.

Consumer Discretionary (NYSEARCA:XLY): -0.06 percent
Technology: (NYSEARCA:XLK): +0.17 percent
Industrials (NYSEARCA:XLI): +0.10 percent
Materials: (NYSEARCA:XLB): +0.16 percent
Energy (NYSEARCA:XLE): +0.29 percent
Financials: (NYSEARCA:XLF): -0.14 percent
Utilities (NYSEARCA:XLU): -0.73 percent
Health Care: (NYSEARCA:XLV): -0.22 percent
Consumer Staples (NYSEARCA:XLP): -0.19 percent

Bottom line: Although stocks generally made a modest decline on Thursday as a result of two disappointing economic reports, the Dow Jones Industrial Average managed to reach new record intraday and closing highs.

John Nyaradi is the author of The ETF Investing Premium Newsletter.

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