Stocks slipped on Thursday as mixed economic data kept Wall Street locked in a tight trading range, while FedEx shares fell after it forecast profit below estimates.
FedEx Corp (NYSE:FDX - News), seen as a bellwether for the economy because of the wide range of industries it serves, forecast profit for the current quarter below expectations and warned the economic recovery may slow. FedEx fell nearly 4 percent to $82.73.
A drop in initial jobless claims to a two-month low last week was not enough to lift the market, while U.S. Mid-Atlantic factory activity contracted more slowly in September. The reports further reduced the odds of a double-dip recession feared by financial markets.
The S&P 500 has settled into the top of a trading range and found support at its 200-day moving average around 1,115 and resistance at 1,130.
"There's technical overhang as well as more of the same in regards to economic data," said Chad Morganlander, a portfolio manager at Stifel Nicolaus & Co in Florham Park, New Jersey. "Albeit marginally below expectation, it continues to show signs that the economy is glacially weakening.
World stocks fell on Thursday as data showed the U.S. economy's recovery remained halting, while the dollar was flat against the yen a day after Japan's huge intervention to weaken its currency.
Gold rose to a record high above $1,275 per ounce as jitters about any further yen selling and broader economic uncertainty enticed more investors to the safe-haven commodity.
U.S. government bond prices fell after Philadelphia Federal Reserve data suggested business conditions contracted in the U.S. Mid-Atlantic region in August, though not as severely as in July, while U.S. weekly claims for unemployment benefits dropped to a two-month low but still remained high.
"All the ingredients are still there, all the uncertainty and fear, to keep gold underpinned." said Robin Bhar, analyst at Credit Agricole in London.
Investors remained worried that high U.S. jobless numbers, despite falls in weekly insurance claims, would signal a slowdown in the pace of the economic recovery.
The Dow Jones industrial average .DJI was down 28.57 points, or 0.27 percent, at 10,544.16. The Standard & Poor's 500 Index .SPX was down 6.17 points, or 0.55 percent, at 1,118.90. The Nasdaq Composite Index .IXIC was down 12.48 points, or 0.54 percent, at 2,288.84.
The FTSEurofirst 300 .FTEU3 index of top European shares ended 0.8 percent lower to hit its lowest closing level in a week after disappointing British retail sales in August, a sign the UK economy was on a slow growth path.
"Times are difficult because of the combination of high unemployment, banks not lending yet and governments starting to implement austerity measures. All these factors are not going to be resolved overnight," said Franz Weis, a fund manager at Comgest in Paris.
MSCI's All-Country World Index .MIWD00000PUS was down 0.51 percent, while Tokyo's benchmark Nikkei stock index .N225 ended down 0.07 percent.
YEN TALK
Investors were jittery after Wednesday's currency intervention by Japan, its first in six years, that knocked the yen from a 15-year high versus the dollar. The Bank of Japan's money market data showed the yen-selling intervention may have totaled around 1.76 trillion to 1.86 trillion yen ($20.52-21.69 billion). [ID:nTKW007123]
Adding to investor nerves, Japanese Prime Minister Naoto Kan pointed to more potential yen selling.
In midday trading, the dollar JPY= was down 0.05 percent at 85.69 from a previous session close of 85.73.
"Things have been quiet on the intervention front so far today. Clients are hesitant at this point to touch dollar/yen in either direction," said Amelia Bourdeau, senior currency strategist at UBS AG in Stamford, Connecticut.
Wednesday's move was designed to protect Japanese exports from a too-competitive exchange rate and ward off job losses.
The euro rose to its highest in more than a month against the dollar EUR= to $1.3112 and was last trading up 0.55 percent at $1.3075, and against the yen EURJPY= it rose to 112.24 after strong demand at a Spanish bond auction reinforced confidence in Europe's sovereign issues.
Spain sold a combined 4 billion euros in 10-year and 30-year bonds, at the top of its targeted range, attracting solid demand and lower yields than its last auction in June. [ID:nLDE68E0YT]
The country was among those most in the limelight during the sovereign debt crisis earlier this year.
The Swiss franc weakened broadly after the Swiss National Bank kept interest rates unchanged as expected and forecast a slowdown in economic growth because of strength in the currency. [ID:nWEA8411]
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