U.S. Indexes Lower on Dashed Hopes in Europe; Weekly Claims Fall

Nichole Harper
08 Dec, 2011
New York City

U.S. stocks traded in a tight range with a negative bias ahead of the European summit of leaders. Banks led the decliners after the ECB did not indicate if it planned to increase its sovereign bond buying program. Initial weekly jobless claims last week fell below 400,000.

[R]12:10 PM New York – U.S. stocks traded in a tight range with a negative bias ahead of the European summit of leaders. Banks led the decliners after the ECB did not indicate if it planned to increase its sovereign bond buying program. Initial weekly jobless claims last week fell below 400,000.[/R]

U.S. market indexes traded lower as European leaders gather in Brussels one more time to find a solution to the widening debt contagion in the region.

The latest meeting of leaders has raised the hopes that at least the 17 euro zone member nations of the 27 member European Union will accelerate the fiscal union and agree on fiscal spending limits.

The leaders are meeting under mounting pressures within and outside the region to find a long term solution to the widening debt problem and rising interest rates in the region.

The mood was cautious as the European Central Bank did its part to support the liquidity in the financial system. The central bank today lowered its key lending rate by 25 basis points to 1% and offered more loans of longer term maturities to banks.

However, the central banks stopped short of supporting its bond buying program and bond yields of Spain and Italy increased after the ECB decision.

The central bank also lowered its assessment of the economic outlook in the region and also estimated that the economy may shrink by 0.4% next year.

U.S. Jobless Claims Fall

Initial claims of jobless benefits in the last week declined 23,000 to seasonally adjusted 381,000 according to the Labor Department.

The 4-week moving average of the claims declined 3,000 to 393,250, the lowest since the first week in April and the number of people on continued jobless benefits declined 174,000 to 3.58 million in the week end November 26 and on extended benefits fell 178,610 to 2.79 million.

Total number of people claiming benefits under the program declined 431,397 from the previous week to 6.57 million.

Stock Movers

Banks traded lower after European Central Bank President Mario Draghi dashed hopes to expand the sovereign bond purchase program in the euro zone.

Morgan Stanley ((MS)) declined 5.8% to $16.32, Goldman Sachs ((GS)) dropped 3.9% to $101.03 and J.P. Morgan Chase ((JPM)) decreased 4% to $32.65.

Bank of America ((BAC)) fell 3.3% to $5.70.

Ciena Corp rose 3.4% $12.32 after the networking gears maker reported smaller loss on a higher revenues from its high end switching equipment.

Costco Wholesale Corp declined 65 cents to $86.82 after the operator of warehouse stores reported fiscal first quarter profit that was below market expectations and increased 2.6%.

Layne Christensen Company declined 83 cents to $23.80 after the water infrastructure and treatment services provider said third quarter revenues increased 9.3% to $294.9 million and earnings increased to $8.8 million or 45 cents from $8.2 million or 42 cents a share.

Medtronic Inc declined 2.3% to $35.55 after the medical equipment maker received a subpoena from the California Attorney General two months ago for its controversial spine product according to a regulatory filing today.