Stocks see declines in midday action following three straight sessions of gains. On Wednesday, stocks rallied sharply following the FOMC statement. Though the Fed didn't change their statement much, it was enough to convince traders that the committee is not likely to raise rates anytime soon and could even cut them if economic data continues to disappoint. Thursday's trading is seeing minor losses on higher oil prices and a profit warning from Motorola (MOT).
Shares of MOT are down more than five percent today after the company warned that it would see a sales decline for the first time in four years this quarter. As a result, MOT will also see a profit loss and its results will be well below current analyst estimates. Traders didn't seem to be impressed with the company's new CFO and COO either.
In economic news Thursday, jobless claims this past week fell to a six-week low at a level of 316,000. This pushed the four-week moving average down by 3,750 to 326,000. In other news, the Conference Board announced that leading indicators fell 0.5 percent with only four of 10 indicators rising. January's data was revised to a decline of 0.3 percent from the initial gain of 0.1 percent.
Home builder KB Home (KBH) announced earnings that showed an 84 percent drop in earnings. However, the company's results were better than expected, yet the stock is still lowing three quarters of a percent. KBH stated that there is tough competition due to the imbalance in housing supply and demand. In fact, the company stated that it doesn't expect conditions to improve much during the remainder of 2007.
Oil prices are up about three percent Thursday to trade above $61 a barrel. The fact that the Fed seems closer now to easing than before the Fed meeting has provided bullishness for oil. Crude prices had fallen of late on concerns global economic slowing would reduce demand. If the Fed is willing to cut rates down the road to spur economic growth, it would also result in greater demand for crude.
Despite some weakness today, the bulls have to be pleased with the current situation of the stock market. Stocks are up sharply this week despite continued worries about the subprime sector and concerns about global economic growth. Overall, it seems that traders were looking for an excuse to buy this week and thus the major market indices have seen solid gains.
Senior Staff Writer & Options Strategist
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