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Major stock market indices drop

04 December 2009 08:17 (UTC +04:00)

Baku- APA-Economics. Investors shied from making big bets on stocks after a weak snapshot of the service industry revived worries about the economy, AP reported.
Major stock indicators zigzagged in a tight range Thursday after the Institute for Supply Management said its index of activity in the service industry fell to 48.7 in November from 50.6 in October. That was below what analysts had been expecting and signaled contraction.
The market drew some support from a Labor Department report that new claims for unemployment benefits fell unexpectedly for the fifth straight week.
The number of laid-off workers seeking unemployment benefits fell by 5,000 last week to 457,000, in a hopeful sign of improvement in the job market. Economists had expected an increase, according to a survey by Thomson Reuters. The report came a day ahead of the government’s November unemployment figures.
Meanwhile, the technology-heavy Nasdaq composite index got a boost from Comcast Corp., which said it agreed to buy a majority stake in NBC Universal for $13.75 billion. The long-awaited deal gives the nation’s largest cable TV operator control of the TV network as well as cable channels and a major movie studio.
The stock market’s modest overall moves followed steep gains early in the week and mixed trading Tuesday. A surge in stocks has lasted nearly nine months and some analysts worry that the market’s advance is outpacing gains in the economy.
Tim Knepp, chief investment officer of Genworth Financial Asset Management, said it wasn’t surprising to see the market pause ahead of Friday’s jobs report. There is broad agreement that a recovery in jobs is crucial for the economy to continue growing. Economists expect that employers cut 130,000 jobs last month and that the unemployment rate remained flat at 10.2 percent.
"It’s understandable that the market would tread water at this point," he said. "Job creation is going to be the key to sustaining any kind of rally."
In late afternoon trading, the Dow Jones industrial average fell 33.32, or 0.3 percent, to 10,419.36. The broader Standard & Poor’s 500 index fell 4.01, or 0.4 percent, to 1,105.23, while the Nasdaq composite index rose 1.10, or 0.1 percent, to 2,186.13.
Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.39 percent from 3.32 percent late Wednesday.
The dollar mostly rose against other major currencies, while gold rose.
Crude oil fell 14 cents to settle at $76.46 on the New York Mercantile Exchange.
Burt White, chief investment officer at LPL Financial in Boston, said the occasional downbeat economic reports aren’t likely to derail the market as investors continue to see longer-term improvements in the economy.
"We do hit some speed bumps on the road and today we hit a couple, especially with ISM, but we’re still pretty bullish that stocks have a way to go," he said.
The day’s trading was subdued as Federal Reserve Chairman Ben Bernanke appeared on Capitol Hill as he seeks to win confirmation for a second four-year term. Bernanke told the Senate Banking Committee that he would work with lawmakers to reshape the country’s financial regulatory setup as well as to rein in supports for the economy as a recovery takes hold.
Shares of Comcast rose $1.13, or 8 percent, to $15.31. General Electric Co., NBC’s parent since 1986, rose 7 cents to $16.14.
Bank of America rose 45 cents, or 2.9 percent, to $16.10 after announcing late Wednesday it would repay its $45 billion in government bailout money.
Falling stocks narrowly outpaced those that rose on the New York Stock Exchange, where volume came to 826.7 million shares compared with 790.7 million shares traded Wednesday.
The Russell 2000 index of smaller companies fell 1.79, or 0.3 percent, to 594.30.
Overseas, Britain’s FTSE 100 fell 0.3 percent, while Germany’s DAX index fell 0.2 percent, and France’s CAC-40 rose 0.1 percent. Japan’s Nikkei stock average rose 3.8 percent.