U.S. stocks struggled to take flight on Thursday as investors digested a batch of mixed economic reports on Thursday and a number of earnings from retailers.
Headline numbers on inflation report suggested a sharper drop than expected. However, core consumer priced inched up more than forecast by economist polled by MarketWatch.
Persistent disinflation could complicate the Federal Reserve’s desire to begin normalizing interest rates sometime this year. However, Fed Chairwoman Janet Yellen in her testimony to Congress said inflation is likely to move higher toward the 2% target after initial falls due to a drastic plunge in oil prices.
Weekly jobless claims jumped by more than expected, above the 300,000 level. The four-week average trend, which cuts out noise is still below that number. Meanwhile durable-goods orders were higher than expected.
The S&P 500 SPX, -0.16% hovered near there closing levels from yesterday, with five of its 10 main sectors in positive territory. Telecoms and technology stocks led advancing stocks. Energy stocks, however, were selling off in the wake of a drop in oil prices.
The Dow Jones Industrial Average DJIA, -0.09% switched between small gains and losses. More than half of its 30 components were trading lower, with Chevron Corp and Exxon Mobil leading the losses.
The Nasdaq Composite COMP, +0.19% outperformed other indexes, moving up 0.3%. The tech-heavy index is less than 20 points away from the 5,000 level.
Recent record levels on the main indexes prompted some analysts to sound alarms, calling the topping of the market.
Albert Edwards, chief global strategist at Société Générale, and a notoriously bearish strategist, pointed to a deteriorating economic picture and a growing disconnect between the stock market and economic reports, in a note to investors.
“With equity markets galore hitting record highs clearly I must be missing something big! We are at that stage in the cycle where I begin to doubt my own sanity. I’ve been here before though and know full well how this story ends and it doesn’t involve me being detained in a mental health establishment (usually),” Edwards wrote.
Just as the beauty is in the eye of the beholder, some analysts find the economic data positive. Jeff Kravetz, regional investment strategist at U.S. Bank Wealth Management, wasn’t worried about the latest inflation numbers.
“Inflation moved lower but it is still in the zone of positive low inflation, which is good for stocks. Another important factor is the stronger dollar, which will bring more demand from international investors. Price appreciation in the stock market will be sustainable because of positive economic backdrop,” Kravetz said.
He pointed that there are still many risks, such as Greece, Ukraine and Russia and other geopolitical threats that may result in short-terms pullbacks.
Stocks in focus: Salesforce.com Inc. CRM, +11.18% rose 11%. Late Wednesday, the software maker posted strong growth in deferred sales, which measures its future sales from a subscription-based business model.
Sears Holdings Corp. SHLD, -7.60% shares fell sharply after the retailer posted continuing quarterly sales losses and offered more details on a plan to convert assets into a real-estate investment trust.
Kohl’s KSS, +1.27% shares were little changed after the retailer beat profit and sales estimates and raised its dividend. SeaWorld Entertainment Inc. SEAS, -5.90% fell more than 3%after its loss per share was worse than expected.
Herbalife Ltd. HLF, -0.92% J.C. Penney Co. Inc. JCP, +0.85% Gap Inc. GPS, -0.04% and Ross Stores Inc. ROST, +0.72% will report after the close.
Other markets: European stocks SXXP, +1.02% got a small lift from news of a fall in German unemployment, while Japanese stocks NIK, +1.08% once again touched a 15-year high. Gold GCJ5, +0.67% was looking at a second day of gains, up another $8 to $1,209.60 an ounce. Oil futures CLJ5, -3.24% fell.
Source: MarketWatch
