Gasping For Air Or Catching Its Breath?
Yet another increase in the weekly unemployment numbers helped bring into
question whether the economy is as robust as several economic reports have
recently suggested, and that helped trigger a pullback among the major averages
Thursday.
Tech led the retreat, as the Nasdaq sank 3.2%, although it did manage to
close off its lows of the day. The Dow and S&P 500 were also lower, falling
0.7% and 1.4%, respectively.
Unemployment claims rose 9000 to 421,000 to keep in place its increasing
four-week moving average that is currently at levels associated with a recessionary
economy. All eyes will be on the April jobs report due out on Friday.
Volume eased slightly from Wednesday’s levels, as 1.97 billion shares changed
hands on the Nasdaq and 1.10 billion shares traded on the NYSE.
Analysts were not surprised at the day’s pullback, especially since the
Nasdaq had posted four straight positive closes to top off a stellar run-up from
its April 4 lows.
“I think this is a normal pullback today, but I think the bigger news is
that we are in a good uptrend now. We have had good improvement in our trend
indicators as the overall environment has improved,” said Tim Hayes, Global
Equity Strategist, Ned Davis Research.
“People should not overreact to a few days of weakness as if we are
going back to new lows because I think we have pretty much broken that. As long
as we hold around 1200 on the S&P as a support level, then I think we’ll be
okay.”
According to preliminary numbers, the Nasdaq fell 74.42 to 2146.58, the Dow
slid 80.03 to 10,796.65, and the S&P 500 eased 18.85 to 1248.58.
Sectors avoiding the selling pressure were the banks
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and insurance
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On the downside were computer technology
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biotechnology
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5.2%.
Techs avoiding the selloff included i2 Technologies
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22.49 and Rambus
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volume.
In the top-performing banks, U.S. Bancorp
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Mellon
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Dow winners were Philip Morris
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Citigroup
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4.8%.
Looking ahead, the March employment report will be released on Friday at 8:30
AM ET and should offer more insight into how strong or weak the economy remains.
Analysts expect a very modest increase of 27,000 new non-farm jobs, and they
also look for the unemployment level to stay put at 4.4%.