April 15, 2010, 11:58 a.m. EDT
By Donna Kardos
NEW YORK (MarketWatch) — U.S. stocks fluctuated between slight gains and losses Thursday as the industrial sector was boosted by improving manufacturing conditions, but an unexpected jump in weekly jobless claims and an expected monetary policy tightening in China weighed. The Dow Jones Industrial Average recently was down 10 points, or 0.1%, to 11114, in recent trading.
Hewlett-Packard was among the measure’s worst performers with a drop of 0.7%. German and Russian authorities are investigating whether Hewlett-Packard executives paid millions of dollars in bribes to win a contract in Russia, according to a Wall Street Journal report citing people familiar with the matter. Wal-Mart also weighed with a drop of 0.8% after the chief executive of its U.K.-based supermarket chain Asda set out plans for a big expansion of its stores, but said the company is cautious about the economic outlook.
However, Intel jumped 2.4%, extending the stock’s gains after the chip giant posted strong first-quarter earnings Tuesday afternoon. Caterpillar was also strong, up 1.4%, boosted by a strong round of manufacturing data for the New York and mid-Atlantic areas.
The Nasdaq Composite gained 0.2%. The Standard & Poor’s 500-stock index slipped 1%, with the consumer staples sector leading its declines. But the industrial sector climbed, led by United Parcel Service. The shipping giant said its first-quarter adjusted earnings jumped a better-than-expected 37%, as the company improved operating margins across all three segments and noted improvement in its international package and supply chain businesses. UPS jumped 5.9%.
Also boosting industrials, New York manufacturers saw business conditions improve in April, according to the Federal Reserve Bank of New York’s Empire Manufacturing Survey released Thursday. The report also showed further gains in the labor markets this month and expectations remained bright. Meanwhile, mid-Atlantic manufacturers posted better-than-expected improvement this month, paced by new orders, according to a report released Thursday by the Federal Reserve Bank of Philadelphia.
“It shows that the economy from the basic level, from the ground up from manufacturers, is improving,” said Adam Sarhan, chief executive of Sarhan Capital. “The fact that we have stronger-than-expected numbers on the manufacturing front bodes well for the economic recovery, especially if inflation is tame.”
Other economic data released Thursday was less encouraging. The Labor Department said in its weekly report that initial claims for jobless benefits rose 24,000 to 484,000 in the week ended April 10, marking the second-straight week of increases in initial claims. Economists surveyed by Dow Jones Newswires had expected a drop of 15,000.
Meanwhile, China’s government released data showing its economy expanded 11.9% from a year earlier in the first quarter of 2010, a strong result that highlighted the increasing risks of overheating. The growth was faster than the 11.5% median forecast of economists surveyed by Dow Jones Newswires, and increased expectations for China’s central bank to undergo tightening measures.
“Obviously China is going to have to tighten policy because it cannot run at an 11.9% GDP pace for very long,” said David Chalupnik, head of equities at First American Funds. “That’s taken as a negative for the market.”
The dollar strengthened against the euro as Greece lowered expectations on the amount it hopes to raise from a global dollar bond at the end of this month and may even drop the plan altogether, two government officials said Thursday, raising the specter of a European Union and International Monetary Fund bailout.
The dollar weakened against the yen although the U.S. Dollar Index, which tracks the U.S. currency against a basket of six currencies, climbed 0.4%. Treasurys advanced, pushing the 10-year note to a yield of 3.84%. Crude-oil futures edged down while gold futures edged up, reversing earlier declines.
Still to come, the April housing index will be released at 1 p.m. EDT.