employment report on Friday. Some stock activity likely reflected quarter-end window dressing, notes Standard & Poor's MarketScope.
The Dow Jones industrial average fell 37.17 points, or 0.35%, to 10,503.76. The broader Standard & Poor's 500 index was edged down 0.82 point, or 0.07%, to 1,180.59, as gains in energy stocks lended support. The Nasdaq composite index lost 6.44 points, or 0.32%, to 1,999.23.
In the energy markets, May NYMEX crude settled up $1.41 at $55.40 per barrel The sharp rally was led by heating oil and gasoline futures (April contracts expired at the close), which were apparently bought up heavily by speculative fund accounts, reports Action Economics. In addition, Goldman Sachs analyst Arjun Murti said he believes the oil markets have entered a long term period of increases that could take the benchmark West Texas Intermediate grade of crude to $105 a barrel.
Friday's main event is the employment report for March. Economists expect nonfarm payrolls to increase by 225,000 following the out-sized 262,000 gain in February. The unemployment rate is expected to moderate to 5.3% from the February jump to 5.4%. The workweek is projected to hold at 33.7 hours, and hourly earnings are expected to rise 0.2% following the flat reading in February. "The data should confirm that the labor market continues to post healthy growth, although we believe the report will not heighten risk of a 50 basis point tightening by the Fed," says economic research outfit Action Economics.
Also coming Friday are reports on February construction spending, which is expected to rise 0.6%, and the University of Michigan consumer sentiment, which is forecast to be unchanged from the preliminary level of 92.9 and February's 94.1.
Big-name companies on the earnings calendar include Best Buy (BBY
In economic news Thursday, U.S. jobless claims jumped 20,000 to 350,000 for the week ended Mar. 26, following a revised 330,000 the week before (324,000 initially). Claims were expected to fall by 4,000. The surprise jump in claims could cause a knee jerk lower in Treasury yields, says Action Economics. On Friday, the March employment report will be released.
Personal income rose 0.3% in February, after a revised 2.5% decline in January (down 2.3% previously). Spending rose 0.5% after a revised 0.1% gain in January (flat previously). The PCE deflator -- an inflation gauge -- was up 0.3% (from 0.2% in January), with the core reading that excludes food and energy up 0.2% (from up 0.3% in January). On a year-over-year basis, the deflator accelerated to a 2.3% growth pace from 2.2% in January; the core was steady at 1.6%. The market based price index was steady at up 2.4%; the core market based index was also steady at 1.7%.
The March Chicago purchasing managers' index surged to 69.2 in March from 62.7 in February, much stronger than expected.
And factory goods orders rose 0.2% in February after a revised to unchanged in January (+0.2% previously). The previously-reported 1.3% drop in durable orders was revised to a rise of 0.5%.
Among stocks on the move, J.C. Penney (JCP
) rallied after Women's Wear Daily reported that the department store chain is the target of a leveraged buyout by a group led by Cerberus Capital Management LP and the Carlyle Group.
In other merger news, Qwest Communications' (Q
) raised its takeover offer for MCI Inc. (MCIP
) to $8.94 billion. On Tuesday, MCI agreed to a sweetened $7.51 billion deal with Verizon (VZ
Some of the familiar corporate headlines were still pretty glum, notes Action Economics. American International Group (AIG
) confirmed that adjustments for improper accounting could cut its net worth by $1.7 billion. On Wednesday, S&P stripped AIG of its triple-A credit rating. Berkshire Hathaway (BRK.A
) is still trying to distance itself from involvement with the scandal.
At Morgan Stanley (MWD
), the succession battle has gotten even thornier as ex-Morgan execs take aim at CEO Philip Purcell.
Biogen Idec (BIIB
) was lower after the biotech outfit released new evidence yesterday linking its Tysabri drug to a fatal nerve disorder. Elan Corp. (ELN
), Biogen's partner in the now-suspended drug, has lost half its value. Tysabri was designed to treat multiple sclerosis and may not make it back on the market.
And housing agency Freddie Mac (FRE
) confirmed that interest rate swings cut its net income by 41% in 2004.
Treasury prices advanced, and yields tumbled, in the wake of relatively tame core PCE prices and a big jump in reported initial claims, coming just ahead of the payrolls report tomorrow, says Action Economics. The 10-year note yield sank 6 basis points to 4.50%.
European stock markets were mixed on Thursday on the back of Wednesday's gains on Wall Street. London's Financial Times-Stock Exchange 100 index was down 6.3 points, or 0.13%, to 4,894.4.
Germany's DAX index rose 1.23 points, or 0.03%, to 4,348.77. The German unemployment rate climbed in March to 12% from 11.7% in February.
In Paris, the CAC 40 index added 3.17 points, or 0.08%, to 4,067.78. France's jobless rate held at 10.1% in February.
Asian markets finished with strong gains on Thursday amid optimism about U.S. economic growth. In Japan, the Nikkei 225 index climbed 103.07 points, or 0.89%, to 11,668.95.
In Hong Kong, the Hang Seng index rose 91.13 points, or 0.68%, to 13,516.88.