U.S. stocks declined on Thursday afternoon. Underwhelming economic indicators served as a bleak backdrop for disappointing earnings from market movers like UnitedHealth Group (NYSE:UNH) and EBay (NASDAQ:EBAY).
|DJIA: -0.56% to 14,537.10||S&P 500: -0.67% to 1,541.61||NASDAQ: -1.20% to 3,166.36|
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Here are three stories that helped shape the markets on Thursday afternoon:
1) Jobless Claims Rise: Should We Be Worried? The idea that the labor market recovery is losing steam is gaining more adherents. After the Labor Departments Employment situation report showed that employers added just 88,000 workers to their payrolls last month, following the solid 268,000 added in February, last week’s unemployment data showed that the number of Americans filing new claims for unemployment benefits rose last week.
Although initial jobless claims increased 4,000 to a seasonally adjusted 352,000, as the Labor Department said Thursday — a figure broadly in line with economists’ expectations — claims stayed near levels normally associated with average monthly job gains of more than 150,000. That fact helped allay concerns that the labor market’s conditions were deteriorating, especially since the labor participation rate hit a new low for the recovery, and its lowest level since 1979, in March… (Read more.)
2) Business Outlook Remains Modest in April: “Manufacturers responding to the Business Outlook Survey reported near steady business activity in April,” begins the latest report from the Federal Reserve Bank of Philadelphia.”The indicator for overall activity remained slightly positive this month, but other broad indicators were mixed.”
The general conditions diffusion index for manufacturing conditions within the Philadelphia Federal Reserve district was 1.3 in April, slightly higher than the 2.0 reading registered in March. All told, 22 percent of firms reported increasing activity, while 21 percent of firms reported decreasing activity. Unfortunately, labor market conditions turn a turn for the worst, with the employment index posting its first negative reading (-6.8) in three months. Seventeen percent of firms reported a decrease in employment, while just 10 percent reported an increase. The workweek index remained negative (-12.9) for the fourth consecutive month… (Read more.)
3) Should You Get Defensive With Dividends? After one of the strongest starts to a year on record, many investors are expecting stocks to at least offer a minor pullback. On average, stocks experience a 5 percent dip about three times a year. However, the current rally from the November lows has proven itself to be above average. Investors seeking to take precautions against the inevitable pullback, while maintaining equity exposure, may want to focus on dividend-paying names.
Capital gains feel warm and fuzzy, but cash flow helps lock in returns. According to the latest Ibbotson SBBI Yearbook, the stock market has returned an average of about 8.5 percent each year since 1825. Dividends accounted for 5.0 percent of the annual gains. With recent reports hinting at a further economic slowdown, those dividend gains may play a significant role in a portfolio… (Read more.)
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