The Dow Jones industrial average fell 0.32 point to 10,216.59. The broader Standard & Poor's 500 index was down 0.84 point, or 0.07%, to 1,176.84. The tech-heavy Nasdaq composite index rose 9.75 points, or 0.48%, to 2,047.22.
In the energy markets, November West Texas Intermediate crude oil fell $1.04 to $63.08 a barrel, after the weekly energy inventory data came in mixed. EIA inventory data revealed a less than expected 1.0 million barrel build in crude stocks, and while gasoline and distillate draws were much larger than expected, waning demand, and record gasoline imports ultimately saw energy bears take the upper hand, says Action Economics.
A rash of economic reports will be released Friday. The September overall consumer price index (CPI) is expected to surge 0.9%, while the core index increases 0.2%. Hurricane Katrina will result in a huge gain in gasoline prices, natural gas, and other refined product. A big gain in energy is well priced-in, says Action Economics.
"The focus for the markets will be on the core [CPI], as Fedspeak has expressed increased concern with inflation pressures," says Action Economics. "The risk is that shortages related to the hurricanes will prompt some upside outside of energy."
The report on retail sales -- a key guage of consumer spending -- is expected to show an increase of 0.3%, while the ex-auto aggregate increases 0.6%. The auto component is expected to be relatively neutral on the month, as the further slowdown in unit vehicle sales will be offset upside in the parts component following weakness the last two months, says Action Economics.
Friday's release of the preliminary reading for September University of Michigan consumer sentiment is expected to rebound to 80.0 from the previous reading of 76.9. Hurricane Katrina took a heavy toll on sentiment in September, both from negative news stories and the related surge in gasoline prices, says Action Economics. But, more timely measures of sentiment in October suggest sentiment has already begun to lift from the hurricane trough, says Action Economics.
Also coming Friday is industrial production and business inventories.
In economic news Thursday, the U.S. trade deficit widened to $59.0 billion in August from a revised $57.96 billion. Imports rose 1.8% thanks to surging oil prices; crude was up 9.5%. Exports rose 1.7%. The data are in line with market expectations.
Investors focused on a report showing U.S. import prices surged 2.3% in September after a 1.2% increase in August, well above expectations. Prices are up 9.9% year-over-year (from 7.6% in August). Petroleum prices were up 7.3% (48.0% year-over-year). Excluding petroleum, prices were up 1.2% (3.0% year-over-year). Export prices rose 0.9% in September after August's decline of 0.1%.
U.S. jobless claims fell 2,000 to 389,000 in the week ended Oct. 8, from 391,000 the week before.
Among companies in the news, McDonald's (MCD
) shares rose after the company raised its third-quarter outlook. It posted 3.9% higher September same-store sales for McDonald's Restaurants. The fast food chain says September global systemwide sales rose 6.3%, and 6% in the third quarter. It sees preliminary third-quarter EPS of about 58 cents including a 2 cent gain.
Lam Research (LRCX
) posted better-than-expected first-quarter EPS of 35 cents, vs. 64 cents a year ago, on a 24% revenue decline. Morgan Stanley upgraded the stock to equal-weight from underweight, while S&P maintained a strong buy opinion. The shares rose.
On the deal front, The Wall Street Journal reports that Google (GOOG
) and Comcast (CMCSA
) could bid as much as $5 billion to buy a minority stake in AOL's Web site network, instant messaging business, which is owned by Time Warner (TWX
). But Time Warner CEO reportedly says a possible sale of a stake in AOL to those companies was a "market rumor."
Treasuries yields rose, with the 10-year note yielding 4.47%, up from 4.45% yesterday. The bond market will remain sensitive to the price data in September ahead of tomorrow's CPI report, says Action Economics.
European stock markets finished lower on Thursday. London's Financial Times-Stock Exchange 100 index was down 77 points, or 1.44%, at 5,265.2 amid worries about inflation spawned by higher commodities prices.
Germany's DAX index fell 31.7 points, or 0.64%, to 4,950.07 on worries about increased prospects of higher inflation and interest rates.
In Paris, the CAC 40 index lost 44.92 points, or 0.99%, to 4,470.13 as French September inflation rose a higher than expected 0.4% due to higher oil prices.
Asian markets finished mixed on Thursday. In Japan, the Nikkei 225 index fell 14.50 points, or 0.11%, to 13,449.24. Gains in industrial and basic materials shares bolstered the index, says Standard & Poor's MarketScope.
In Hong Kong, the Hang Seng index rose 46.81 points, or 0.32%, to 14,621.83.