Stocks slip after jobless claims report

ByABC News
August 6, 2009, 3:33 PM

NEW YORK -- Investors made few big moves in the stock market Thursday as they waited for the government's July employment report.

Stocks fell in afternoon trading after retailers' sluggish July sales numbers offset a Labor Department report that suggested layoffs are stabilizing. The government said new claims for unemployment benefits totaled 550,000 last week, down from a revised 588,000 the previous week. Economists had been looking for 580,000 new claims.

The department did have some sobering news: The number of people continuing to claim benefits rose by 69,000 to 6.3 million after dropping for three straight weeks.

Meanwhile, many of the nation's big retailers had disappointing sales as consumers, worried about their job security, again spent gingerly during July. That has Wall Street concerned that consumers don't feel confident enough to help give the economy a strong recovery.

"The consumer isn't dead, but he's injured," said Stephen Wood, chief market strategist at Russell Investments.

The day's reports, coming just before the Labor Department's employment numbers, gave investors no incentive to resume the big summer rally that stalled earlier this week. Investors are worried about what the government has to say about the labor market on Friday. If it reports larger-than-expected job losses and a jump in the unemployment rate that's also higher than anticipated, investors are likely to sell out of fear that consumers will retrench further.

Trading has been muted the past two days. While there is genuine uneasiness in the market, analysts say some pause is to be expected after a huge advance; the Dow is up 13.9% in just 18 days.

About two stocks fell for every one that rose on the New York Stock Exchange where volume came to 859.1 million shares.

Despite the growing caution in the market, analysts have been encouraged by the orderliness of the pullback, noting that stocks have shown strength in their ability to hold on to most of their gains rather than selling off sharply.