New York: Weak commodities and a firmer dollar pressured US stocks on Thursday as investors shunned big bets before a jobs report that could determine the next move from the Fed.
The dollar reversed a long downtrend, slamming oil and gold markets, which in turn took a toll on energy and mining stocks. Newmont Mining Corp and Freeport-McMoRan Copper & Gold both fell more than 2%.
Investors said better-than-expected weekly jobless claims limited declines, but the spotlight was on Friday’s larger non-farm payrolls report.
Friday’s report is expected to show payrolls were unchanged in September, but the release has bigger implications for a market hoping that weak data will spur the Federal Reserve to take further steps to boost the economy.
“This one, unfortunately, gets into the realm of economic psychology,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
“I think the market would appreciate (a number) that’s a little better, but that still allows the Fed to come in.”
The euro’s recent rally against the dollar stalled as investors booked profits. The dollar and equities have had an inverse relationship as investors take money out of stocks for the perceived safety of the greenback.
Good news came from retailers, who reported sales at stores open for a year or more increased 2.8% in September, helped by back-to-school shopping, and showing an uptick in consumer spending. The guage has been on the rise for the last 13 months, despite persistent unemployment.
Alcoa Inc kicked off the unofficial start to earnings season after the closing bell. The largest US aluminum producer reported a lower third-quarter profit, but said global markets were strengthening. Its shares rose 3.2% to $12.59 in extended trade.
But some lackluster earnings reports weighed on the market during the regular session after PepsiCo Inc trimmed the top end of its earnings forecast, while Marriott International Inc’s results failed to beat high expectations. Pepsi was down 3% at $66.10 and Marriott slid 5.8% to $35.67.
The Dow Jones industrial average dipped 19.07 points, or 0.17%, to 10,948.58. The Standard & Poor’s 500 Index eased 1.91 points, or 0.16%, to 1,158.06. But the Nasdaq Composite Index added 3.01 points, or 0.13%, to 2,383.67.
Last month, the Fed hinted at the possibility that it might pump more cash into the US economy, probably through buying bonds, in an additional round of quantitative easing to bolster the anemic recovery after the worst recession since the 1930s.
Growing conviction of further fuel from the Fed in part helped the S&P 500 rally 8.8% in September.
While the overall payrolls number is not expected to change, economists polled by Reuters forecast that private-sector payrolls added 75,000 jobs in September. The unemployment rate is expected to tick up to 9.7% from 9.6% in August.
The materials sector was among the biggest drags on the S&P 500 as the price of gold retreated from a new record high and oil fell nearly 2%, or $1.56, to settle at $81.67 a barrel. The S&P’s resource sector index lost 0.9%, while Newmont Mining was down 2.6% at $63.03 and Freeport-McMoRan declined 2.4% to $91.40.
PepsiCo reported third quarter earnings were up 13% from the year-ago quarter, in-line with expectations. Shares fell about 3%.
Share of Adobe witnessed a huge jumped after a New York Times blog speculated that a secret meeting held by the heads of Adobe and Microsoft could have included discussions of a merger.
On the upside, Abercrombie & Fitch Co jumped 8.9% to $42.03 and American Eagle Outfitters Inc climbed 8.1% to $16.23 as teen apparel retailers led the pack with generally stronger-than-expected US same-store sales in September.
About 7.11 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, below last year’s estimated daily average of 9.65 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of 8-to-7, while on the Nasdaq, about five stocks fell for every four that rose.
Asian indices ended mixed, while the Shanghai Composite remained closed for a holiday. European markets also ended mixed.
Oil for November delivery fell $1.56 to $81.67 a barrel. Gold futures for December delivery fell $12.70 to settle at $1,335.00 an ounce, down from its record high .
The yield on the 10-year bond remained the same as the previous day, at 2.4%