Wall Street Falls on Weak Data from China, Europe; Jobless Claims Fall

Nichole Harper
22 Mar, 2012
New York City

U.S. stocks were under pressure after weekly jobless claims declined last week and the index of leading economic indicators increased in February. However economic data from the euro zone prompted worries of recession and Chinese manufacturing weakened for the fifth month in a row.

[R]11:35 AM New York – U.S. stocks were under pressure after weekly jobless claims declined last week and the index of leading economic indicators increased in February. However economic data from the euro zone prompted worries of recession and Chinese manufacturing weakened for the fifth month in a row.[/R]

Stocks were under pressure after another round of economic signals from China and Europe indicated weakening outlook. However, weekly claims of jobless benefits declined in the last week to a 4-year low and the index of leading indicators increased.

The Labor Department said weekly claims declined 5,000 to a seasonally adjusted 348,000, lowest since February 2008 and the four-week average of the claims eased to 355,000, also a four-year low.

The claims have been trending downward as employers ramp up hiring since December and more than a quarter million people are finding jobs a month in the last three months.

In a separate report, the Conference Board said its leading economic indicator index increased 0.7% in February after rising 0.2% in January. The latest increase lifted the index to a new high since June 2008.

Weak Economic Data from Europe, China

European indexes edged lower more than 1.4% after Chinese manufacturing activity fell to a four-month low and euro-zone private sector output contracted unexpectedly in March. Both manufacturing output and service sector activity in the euro area shrunk in March.

Output rose in Germany, but fell slightly in France for the first time in four months, and dropped sharply again in the rest of the region.

In addition, China''s manufacturing sector shrank for a fifth consecutive month in March, a survey by Markit Economics showed. The weakening demand for exports and falling growth in the domestic demand contributed to the latest monthly weakness.

The headline flash HSBC/Markit manufacturing purchasing managers'' index fell to a four-month low of 48.1 in March from 49.6 in February.

Markets in Asia were under pressure and trimmed gains after the release of the weak Chinese manufacturing outlook. The Chinese survey dragged indexes across Asia and investors in Tokyo overlooked the trade surplus in February.

Ministry of Finance said exports fell 2.7% in the month and imports increased 9.2% on the rising import of fossil fuels and trade balance swung to a surplus of 32.9 billion yen or nearly $380 million.

The first trade surplus in five month was a surprise as the nation struggles to rebuild its supply chains and imports of fossil fuels soar after nuclear plants were idled in 2011.

Stock Movers

ConAgra Foods, Inc. ((CAG)) fell 12 cents to $26.24 after the food processor reported third quarter net sales increased 7.4% to $3.37 billion from $3.14 billion in the same quarter last year. Net income in the quarter soared 26.4% to $271.6 million or 65 cents per diluted share compared to $214.8 million or 50 cents per share in the year ago period.

Dollar General Corporation ((DG)) gained 3.4% or $1.54 to $46.29 after the discount retailer reported fourth quarter net sales increased 20.1% to $4.19 billion from $3.49 billion in the same quarter last year. Same store sales increased 6.5%. Net income in the quarter increased 7% to $292.5 million or 85 cents per diluted share compared to $222.5 million or 64 cents per share in the year ago earlier.

Discover Financial Services ((DFS)) increased 2.5% or 79 cents to $32.43 after the credit card lender reported first quarter interest income rose to $1.65 billion from $1.55 billion in the same quarter last year. Net income in the quarter soared 36% to $624 million or $1.18 per diluted share compared to $459 million or 84 cents per share in the year ago.

FedEx Corporation ((FDX)) dropped 3.9% or $3.77 to $92.04 after the air courier reported third quarter total revenue increased 9% to $10.56 billion from $9.66 billion in the same quarter last year. Net income in the quarter surged 126% to $521 million or $1.65 per diluted share compared to $231 million or 73 cents per share in the year ago.

FedEx expects fourth quarter earnings to be between $1.75 to $2.00 per diluted share and adjusted earnings to be $6.35 to $6.60 per share for fiscal 2012.