US Stocks Edge Lower, Pare Losses After Philly Fed Report
09/20/2012| 12:23pm US/Eastern
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--Stocks edge lower; pare early losses
--Philadelphia Fed reports less severe drop in business activity than expected
--Data out of Asia and Europe indicate further economic weakness
By Alexandra Scaggs
NEW YORK--Stocks edged lower on worries about economic weakness, but pared early losses after a better-than-expected reading on business activity.
The Dow Jones Industrial Average fell 10 points, or 0.1%, to 13568. Still, the blue chips have gained 4% over the past two weeks, as central banks in the U.S., Europe and Japan have announced stimulus.
The Standard & Poor's 500-stock index lost three points, or 0.2%, to 1458, and the Nasdaq Composite gave up 11 points, or 0.3%, to 3172.
A report on business activity from the Federal Reserve Bank of Philadelphia showed a decline that was less severe than expected. September's reading improved to -1.9, from -7.1 in August. Economists had expected a reading of -5.0.
Major indexes pared losses following the report--the Dow industrials were down more than 50 points before the reading.
"There were people who had pushed the accelerator down with selling, and I think they took their feet off of the pedal after that report," said Mike Shea, managing partner with Direct Access Partners.
Data showed economic slowing in Europe and China, and the U.S. posted weaker-than-expected labor-market data. Initial claims for jobless benefits in the latest week declined slightly from the previous week, to 382,000. That was more jobless claims than expected by economists, who expected a decline to 373,000.
In corporate news, Norfolk Southern Corp. slumped 7.2% after the railroad company provided a third-quarter earnings outlook that was well below current analyst estimates, citing declines in volume and lower revenue from fuel surcharges. Norfolk Southern's warning came less than two days after FedEx Corp. warned investors its full-year profits would be lower than it had previously expected. Transportation and shipping companies are considered bellwethers for economic activity.
"The data point to the fact that we're in a below-average, painfully sluggish economy," said Hank Smith, chief investment officer of Haverford Trust, a Radnor, Pa., firm with $6.5 billion under management. "The market has come a long way recently, so it wouldn't be surprising for it to take a pause here."The market has come a long way recently, so it wouldn't be surprising for it to take a pause here."
European markets slipped, with the Stoxx Europe 600 down 0.2%, after data showing business activity in the euro zone contracted at the fastest pace since June 2009 offset strong demand at a Spanish bond auction.
Asian markets were broadly lower after an initial reading of HSBC's September survey on Chinese manufacturing conditions pointed to continued contraction, with output falling to a 10-month low. China's Shanghai Composite slid 2.1% to its lowest point since Feb. 2, 2009. Japan's Nikkei Stock Average shed 1.6%.
Crude-oil futures reversed early losses to gain 0.2% to $92.49 a barrel, while gold futures lost 0.1% to $1,770.30 a troy ounce. The dollar gained against the euro but fell against the yen.
Real-estate listing company Trulia Inc. surged 40% in its trading debut. Trulia's initial public offering was the first in over a month in the U.S., and was the first of five new listings to hit U.S. exchanges Thursday.
Wholesale motor-fuel distributor Susser Petroleum Partners LP rose 12% after pricing near the top of its expected range.
National Bank Holdings gained 3%, and Spirit Realty Capital gained 2% after its offering. Capital Bank Financial, which operates banks across the Southeastern U.S., gained 1.9%.
Shares of Bank of America fell 1.1% after the Wall Street Journal reported the banking giant is accelerating a cost-cutting plan that includes shedding 16,000 jobs by the end of the year.
Bed Bath & Beyond lost 7.6% after the home merchandise retailer reported fiscal second-quarter earnings that fell short of analyst projections, and same-store sales growth that slowed from the year-ago pace.
ConAgra Foods rallied 6.6% after reporting fiscal first-quarter earnings and revenue that beat expectations, raised its full-year earnings outlook and increased its quarterly dividend by 4.2% to 25 cents a share.
Write to Alexandra Scaggs at alexandra.scaggs@dowjones.com
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