Your move, Ben Bernanke. Less than 24 hours after the Federal Reserve chairman indicated that the Fed would act if it did not see improvements in the labor market, a higher-than-forecast number of jobless claims were filed last week, Labor Department figures revealed today. The Dow Jones Industrial Average (INDEX: ^DJI ) posted a loss, responding to the labor news and a pair of poor manufacturing reports, signaling a lack of cohesion among investors about their confidence in the Fed.
Although jobless claims did decrease by approximately 2,000 from the previous week, the four-week average hit a high not seen since December 2011, and the less-than-expected improvement showed that the economy is weaker than previously believed. Perhaps more troubling, though, is the news out of the manufacturing sector. The Philadelphia branch of the Fed reported a sharp reduction in manufacturing, and financial information firm Markit revealed that its U.S. Manufacturing Purchasing Managers Index fell to its lowest level since July 2011, which signals a slowed rate of expansion.
A couple of stocks in particular weighed down the Dow after the first two hours of trading.
Alcoa (NYSE: AA ) the Dow's biggest loser, led the downturn as a result of the recent manufacturing data. Down 2% this morning, its two awards for Aluminum Excellence yesterday were apparently not enough to convince investors that it could thrive in a troubled manufacturing sector.
Home Depot (NYSE: HD ) also suffered from the manufacturing news. The home improvement store is suffering, as investors believe weak global economic data will keep new home sales at a sluggish pace, and consumers may put off remodels until the economy picks up. Addtionally, Home Depot and Lowe's were forced to recall flushing systems throughout North America after consumers reported that the systems can burst, release stored pressure, and shatter the toilet tank.
Intel (Nasdaq: INTC ) fell hard today, down 2.3%. It's not clear whether investors simply view Intel as heavily hit by the manufacturing data, or are correcting for the gains it made following the hype around Microsoft's Surface tablet. Finally, Hewlett-Packard (NYSE: HPQ ) nearly wiped out the impressive gains it made yesterday, perhaps in response to Apple hinting at releasing a 13-inch MacBook Pro with Retina display, which analysts predict could take significant market share from Hewlett-Packard. Regardless, it highlights a terrible 2012 for Hewlett-Packard; the company has seen its stock fall almost 20%.
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