Market Recap: Tech Sinks, Jobless Claims Plummet, GDP Pops
Markets closed mixed on Wall Street today: Dow 1.3%, S&P 0.81%, Nasdaq -0.43%, Oil 1.58%, Gold -0.03%.
On the commodities front, Oil (NYSE:USO) fell to $82.47 a barrel. Precious metals were also down, with Gold (NYSE:GLD) falling to $1,617 an ounce while Silver (NYSE:SLV) rose 1.31% to $30.53 an ounce.
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Today’s markets were mixed because:
1) Commerce Department. The U.S. economy grew at a rate of 1.3% during the second quarter, faster than originally estimated last month, as exports and spending on services helped boost gross domestic product. The Commerce Department’s earlier figures had GDP gaining 1% during the April-June period. Unfortunately, the revised report comes just as the third quarter of the fiscal year nears its close, so investors will await the Commerce Department’s GDP report for the July-September period, giving second-quarter growth less weight.
2) Jobless claims. Seasonally adjusted initial claims fell to 391,000 last week, a decrease of 37,000 from the previous week’s revised figure of 428,000. The 4-week moving average was 417,000, a decrease of 5,250 from the previous week’s revised average of 422,250. However, the data don’t distinguish between Americans who stop receiving benefits because they find jobs and those who fall off the unemployment rolls because their benefits expire, so a decrease in jobless benefits claims isn’t necessarily the result of higher employment. Still, it might just be that the previous week’s claims were pushed high by Hurricane Irene, and today’s report is a more accurate reflection of employment trends in the U.S.
3) Tech. Technology stocks were the biggest drag on the markets today, with Netflix (NASDAQ:NFLX) leading the way, declining more than 12% as investors continue to drop the stock following its price hike and the decision to split the company’s DVD-by-mail and streaming-video services. In fact, Netflix shares have declined nearly 50% over the last month. Still, Netflix wasn’t the only laggard today, as technology was today’s worst-performing sector, by far. Even Apple (NASDAQ:AAPL), which is expected to launch the much-hyped iPhone 5 next week, saw its shares fall more than 2% today. Baidu (NASDAQ:BIDU) and Sina (NASDAQ:SINA) were also hit hard by news that the Department of Justice is investigating the two Chinese Internet companies for accounting fraud. Altogether, the tech sector was down 1.54% today.