The Dow Jones Industrial Average (DJIA) is clinging to support in the 10,250 region and its 50-day moving average, as the blue-chip barometer dips into negative territory heading into the latter half of the session. Bullish investors have been unable to maintain Wednesday’s break-neck buying spree, and are heading to the sidelines to wait for tomorrow’s nonfarm payrolls report and unemployment rate. A decline in weekly jobless claims and a surprise rise in pending home sales provided enough fuel for a brief rally, but the DJIA was stopped short at resistance in the 10,300 region. The S&P 500 Index (SPX), meanwhile, is holding firmly in positive territory above the 1,080 level, which is home to its 50-day moving average.
Overall, 14 of the Dow’s 30 components are trading in positive territory, with Home Depot Inc. (HD), Cisco Systems Inc. (CSCO), and Wal-Mart Stores Inc. (WMT) leading the way higher. On the downside, American Express Co. (AXP), Travelers Companies Inc. (TRV), and Coca-Cola Co. (KO) are leading the bearish contingent lower.
Taking a closer look at this morning’s economic data, the Labor Department reported that initial jobless claims fell by 6,000 to 472,000 in the latest week. The four-week average of initial claims declined 2,500 to 485,500. Overall, 9.7 million people were collecting some type of unemployment benefits last week, down from 10.1 million on an unadjusted basis.
Also, productivity fell a revised 1.8% in the second quarter, doubling initial estimates from the Labor Department. Worker output grew at a slower pace, with real output rising just 1.6% in the second quarter, compared to the prior estimate of 2.6%. Hours worked rose at a 3.5% annualized rate – the fastest in four years.
Finally, pending home sales rose 5.2% in July, according to the National Association of Realtors (NAR). Economists were expecting a decline of 1%.
In case you missed this morning’s editions of Opening View or 3 Stocks to Watch, below is a quick wrap-up of what you missed:
Hovnanian Enterprises (HOV) reported a narrower third-quarter loss of $72.9 million, or 92 cents per share, as revenue fell to $380.6 million. Analysts had forecast a loss of 47 cents per share on revenue of $396.1 million. Home-building gross margin, before interest expenses included in the cost of sales, rose 17.1% compared with the 9.1% increase a year ago.
Vimpelcom Ltd. (VIP) posted a net second-quarter profit of $334.7 million, or 28 cents per share, as revenue rose 23% to $2.64 billion. Wall Street was looking for a profit of $376 million and revenue of $2.60 billion.
Online marketplace eBay Inc. (EBAY) has announced that it won’t accept payments from services other than PayPal beginning in July 2011, a move that keeps Google’s (GOOG) Checkout off of the site. At present, eBay buyers can use a range of third-party payment options, including Checkout, to process their purchases on the e-commerce site. The move comes as PayPal plays a greater role at eBay. The payment service is already a big money driver for eBay, bringing in $817 million in revenue in the second quarter, or 36% of overall revenue.