Markets & Finance

Stocks Finish Lower


Economic data were better than expected, but disappointing news on Oracle and Google hurt the tech sector

Stocks fell Thursday after news from Oracle (ORCL) and Google (GOOG) raised worries about the tech sector.

Also, traders were pondering data showing the economy is weak, but not weaker than expected. The U.S. economy grew at a 0.6% rate in the fourth quarter of 2007, but the GDP figure was not revised from an previous initial reading.

The U.S. jobless claims fell 9,000 to 366,000 last week, from 375,000 the weak before.

Oracle said earnings grew 30% last quarter. Profits beat expectations, but an increase in revenue of 21% was weaker than expected, raising worries that the economic slowdown is hurting tech spending.

Google was also trading lower after comScore said Google's February paid clicks fell 3% from the month before. A Lehman Brothers analyst cut earnings estimates and target price for the stock.

On Thursday, the Dow Jones industrial average fell 120.16 points, or 0.97%, at 12,302.70. The S&P 500 index lost 15.37 points, or 1.15%, to 1,325.76.

The tech-heavy Nasdaq composite index showed the most weakness, down 1.87%, or 43.53 points, to 2,280.83.

On Thursday, the Federal Reserve began the first of its Term Securities Lending Facility auctions, a new effort to ease the credit markets by allowing banks to borrow with mortgage-backed securities as collateral. The auction generated $86.1 billion in bids for $75 billion in loans.

That was less demand for the emergency financing than many were expecting. "The results suggest that financing stresses may be less severe than feared, because this first TSLF auction did not attract massive interest," said Ward McCarthy of Stone & McCarthy Research Associates.

In the energy markets on Thursday, oil prices were higher after an Iraqi pipeline was bombed. May WTI crude-oil futures rose $1.28 to $107.18 per barrel.

Among stocks in the news Thursday, American Express (AXP) will spend $1.1 billion to buy GE Money's corporate payment services division, owned by General Electric (GE) .

Lennar Corp. (LEN) posted a loss in the first quarter of 56 cents a share, compared with a profit for the homebuilder of 43 cents a year ago.

ConAgra Foods (CAG) saw its third-quarter profits jump 60% on higher prices and higher-than expected sales. Earnings were 63 cents per share, compared to the 39 cents that analysts were expecting according to Thomson Financial. Revenue topped $3.5 billion, compared to the $3.17 billion analysts predicted. The company also agreed to sell its commodity trading and

merchandising operations to the Ospraie Special Opportunities fund and other investors for approximately $2.1 billion, subject to certain

adjustments.

DSW Inc. (DSW), the shoe retail chain, expects same-store sales to fall in the first half of the year. Profits will be "significantly below" earnings of 68-cents per share in the first half of last year, the firm said.

Lehman Brothers (LEH) shares fell 8.9% Thursday after more rumors it was facing financial trouble similar to kind that caused the Bear Stearns (BSC) collapse two weeks before. Lehman called the rumors "totally unfounded."

European markets were higher on Thursday. In London, the FTSE 100 rose 1.01% to 5,717.50, while Germany's DAX index gained 1.37% to 6,578.06, and France's CAC 40 index added 0.92% to 4,719.53.

In Asia, stocks were mixed. Japan's Nikkei 225 fell 0.8% to 12,604.58, while Hong Kong's Hang Seng index gained 0.21% to 22,664.22.

Treasury market

Treasury prices were lower on Thursday. The 10-year Treasury was off 20/32 to 99-22/32 for a yield of 3.54%; and the 30-year bond was down 1-10/32 at 99-26/32 for a yield of 4.39%.

Steverman is a reporter for BusinessWeek's Investing channel.

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