US stocks closed lower on Thursday on worries about the consumer after weak retail sales, and ahead of the December employment report, expected to show massive job losses. Stocks recovered in the afternoon after Democratic lawmakers said they've reached a deal with Citigroup to let bankruptcy judges change home loans in a bid to prevent foreclosures. The DJIA closed 27.24 points lower at 8742.46, the S&P500 added 3.08 points to close at 909.73 and the Nasdaq closed 17.95 points higher at 1617.01.
President elect Obama made the case for his administration's $775bn stimulus package Thursday morning, warning that failure to act could mean the recession lingers on for years.
As expected, the nation's retailers reported dismal December sales as the recession continued to hit consumer spending. Many retailers also warned that quarterly results will decline as well. Even Wal-Mart saw results that were shy of forecasts. The company said that stores open a year of more rose 1.7 percent in December, excluding fuel. That was short of the 2.8 percent gain expected by analysts. Wal-Mart also warned that fourth quarter results won't meet forecasts.
Sears Holdings reported a 7.3 percent drop. However, the company also forecast that fiscal fourth quarter earnings will top current estimates. The stock gained 21 percent.
GAP reported a 14 percent drop in same store sales, which was worse than expected. The company also said fourth quarter profit will be worse than what analysts currently expect. The stock fell 4 percent.
The number of Americans filing new claims for unemployment fell last week, dropping 24,000 to 467,000. However, the declines occurred in a week that included a major holiday - New Years Day. However, investors were more focused on today's jobs report. Employers are expected to have cut 500,000 jobs from their payrolls in December after cutting 533,000 jobs in the previous month. The unemployment rate is expected to have risen to 7 percent from 6.7 percent in the previous month.
Treasury prices rose, lowering the yield on the 10 year note to 2.45 percent from 2.49 percent.
Lending rate improved. The 3 month Libor rate fell to 1.35 percent from 1.40 percent. That marked a new 4 1/2 year low.
The dollar fell against the euro and yen.
US light crude for February delivery fell 93 cents to close at $41.70 a barrel on NYMEX after slumping 12 percent on Wednesday.
COMEX gold for February delivery rose $12.80 to settle at $854.50 an ounce.
Gasoline prices rose 3.5 percent to a national average of $1.762 a gallon.
The Nikkei average slipped 0.5 percent on Friday as exporters lost steam after a recent rally and rekindled worry about the global economy weighed, though trade was cautious throughout the day ahead of key U.S. jobs data. The benchmark, which had climbed nearly 9 percent in a recent rally on hopes for economic steps by the incoming U.S. administration, booked its first weekly decline in a month.
Alfresa Holdings tumbled more than 11 percent after it and fellow drug wholesaler Mediceo Paltac Holdings scrapped merger plans after the nation's fair trade watchdog asked them to review the plans.
But Fast Retailing bucked the market trend and gained more than 3 percent. After the bell, it reported a jump in first-quarter profit and lifted its annual forecast, citing robust sales at its Uniqlo discount clothing stores. Investors were reluctant to actively take positions ahead of U.S. jobs data due later in the day and before a three-day weekend in Japan, market analysts said. Japanese markets will be closed on Monday for a national holiday. The Nikkei average closed 39.62 points 39.62 points lower at 8836.80.
UK stocks closed slightly lower on Thursday, helped off session lows as Wall Street pared earlier falls but held back by weak miners and underwhelmed by an expected 50 basis point interest rates cut by the Bank of England. The FTSE100 closed 2.14 points lower at 4505.37. The Bank of England's MPC cut base rates to an all time low of 1.5 percent.
Weakness in mining stocks weighed against the blue chip index as the metal prices fell amid ongoing economic concerns. Rio Tinto, Anglo American, BHP Billiton and Vedanta Resources lost between 3.1 and 6 percent. But oil stocks rallied after falls as crude prices fell again but held above $41 a barrel, with BP, Royal Dutch Shell up 1.6 and 2 percent respectively, but BG Group was off 0.1 percent. Tullow Oil gained 5.3 percent after it and US explorer Andarko Petroleum made new discoveries around their Jubilee field in China West Africa.
Banks were higher after recent sharp falls on news that the short selling ban in financial stocks will end later this month, with Barclays, HBOS and Lloyds TSB Group gaining between 1.8 and 4.2 percent. RBS added 3.3 percent after the Times newspaper said it was contemplating the sale of its 4.3 percent in Bank of China as part of a widespread review of its international assets. Standard Chartered and HSBC however lost 6.5 and 0.5 percent respectively.
Next and Marks and Spencer fell 1.23 and 3.9 percent respectively on profit taking after better than expected trading update earlier this week.
Sainsbury added 1.9 percent after announcing increased like for like sales for the third quarter and continued growth in customer numbers.
Vodafone fell 1.3 percent after announcing it had tightened guidance on a planned seven year benchmark euro bond after strong demand.
Michael Page and Hays lost 0.4 percent and 0.3 percent respectively, after both companies announced results pointing to underlying weakness in the UK labour market.