Already a Bloomberg.com user?
Sign in with the same account.
Stocks drooped on Thursday as mostly positive news about the economy failed to rally investors bummed out by disappointing corporate reports including news that Dow component Eastman Kodak (EK
) will cut its dividend for the first time in more than 100 years.
The Dow Jones industrial average eased 81.55 points, or 0.87% to 9,343.96 with Kodak accounting for a significant chunk of the losses. The broader Standard & Poor's 500 index was off 6.13 points, or 0.61%, to 1,003.26. The Nasdaq composite lost 26.50 points, or 1.44%, to 1,817.20.
Traders will turn their attention to several economic reports set for release Friday. The final gross domestic product numbers for the second quarter are expected to show that the U.S. economy grew at a pace of 3.1% in the period.
Consumer sentiment in September is expected to have registered a slight improvement, with economic research unit MMS anticipating a reading of 88.5 vs. a preliminary level of 88.2 and August's reading of 89.3.
Friday's earnings docket is rather light with coffee retailer Diedrich Coffee (DDRX
) and luxury resorts operator Boca Resorts (RST
) due to report.
On Thursday, Kodak shares tumbled 18% after the company announced the dividend cut, which came as part of a new strategy emphasizing digital technology. Kodak expects to spend up to $3 billion on investments and acquisitions as it targets $16 billion in annual revenues by 2006. Adding to Kodak's woes: A downgrade of its corporate debt rating to 'BBB-' by ratings agency Standard & Poor's. (Note: An earlier version of this story incorrectly chartacterized Eastman Kodak's current credit rating from Standard & Poor's as below investment grade. The current rating remains investment grade.)
Economic data overall provided a mixed picture of the economy but one report showed continued strength in the housing market, which remains a solid driver of the economy, MMS says. New home sales jumped unexpectedly by 3.4% in August, while existing home sales surged 5.5%.
Initial jobless claims fell unexpectedly for the week ending Sep. 20 by 19,000 to 381,000 compared with an upwardly revised 400,000 the week prior. But the Labor Dept. noted that at least half of that decline was due to disruptions from Hurricane Isabel, MMS says.
But another report revealed that orders for long-lasting goods dropped surprisingly in August. U.S. durable goods orders fell 0.9% in August after a revised 1.5% gain in July (+1.0% initially).
In other equities news, Darden Restaurants (DRI
), the name behind the Olive Garden and Red Lobster chains, reported lower quarterly earnings.
International Multifoods (IMC
), which makes Hungry Jack pancakes and Pillsbury cake mixes, posted slightly lower quarterly earnings, blaming higher ingredient costs and the weaker food-service business.
On the plus side, home goods retailer Bed Bath & Beyond (BBBY
) posted higher quarterly profit and increased its earnings estimates for the year.
Computer memory chip maker Micron Technology (MU
) reported a narrower quarterly net loss that was better than analysts expectated, thanks to increased demand for its chips.
Rite Aid (RAD
), the third largest U.S. drugstore chain, said its quarterly loss narrowed as demand for prescription drugs increased. The company raised its profit estimates for the full year.
Greeting card maker American Greetings (AM
) posted a narrower quarterly loss thanks to improvements in its supply chain and other cost-cutting efforts.
Treasuries finished Thursday's session higher in price. The market made the most out of another stumble by stocks and an early spate of month-end demand. Prices kicked off the session on firm footing, but stumbled into the red on news that initial jobless claims dropped under the key 400,000 level, says MMS.
Earlier, Freddie Mac (FRE
) announced that it would delay by up to two months the results of its long-awaited earnings restatement, from the end of September to November.
European stock markets ended trading mixed. London's Financial Times-Stock Exchange 100 index eased 34.20 points, or 0.81%, to 4,202 on nervousness about earnings and some stock downgrades.
In Paris, the CAC 40 was off 33.24 points, or 1.02%, to 3,230.54 as the government defies the EU, saying it will cut taxes to improve business investment to bolster the economy.
Germany's DAX index gained 18.93 points, or 0.57%, at 3,326.27 as the Ifo business confidence survey rose for the fifth consecutive month and to a 2-1/2 year high. The expectations index soared. The reports give indication that the economy might improve.
In Asia, Japan's Nikkei 225 index closed down 192.25 points, or 1.83%, at 10,310.04, piggybacking on Wednesday's close on Wall Street, which was hurt by OPEC's decision to cut oil production. In Hong Kong, the Hang Seng index eased 9.37 points, or 0.08%, to finish at 11,286.52.