Sears Falls Hard In Third Quarter

NEW YORK (AP) - Stock futures fell on Thursday as investors digested a mix of corporate and economic news, including weaker-than-expected earnings from Sears Holdings Corp. and a strong reading on U.S.

Thursday, November 29th 2007, 7:57 am

By: News On 6


NEW YORK (AP) - Stock futures fell on Thursday as investors digested a mix of corporate and economic news, including weaker-than-expected earnings from Sears Holdings Corp. and a strong reading on U.S. economic growth in the third quarter.

Some pushback was to be expected after stocks had their biggest two-day rally in five years amid growing hopes that the worst of the credit crisis might indeed be over. But Thursday's news injected a bit of uncertainty back into the market.

That was reinforced when the Labor Department said the number of new people signing up for jobless benefits last week jumped sharply, suggesting that the labor market is softening as national economic activity slows.

Sears, parent of its namesake department store chain and Kmart, said profit plunged to a penny per share from $1.27 per share a year ago due to lower sales and clearance markdowns. The results came up far short of Wall Street expectations; analysts polled by Thomson Financial had forecast a profit of 50 cents per share.

Economic growth in the third quarter was much faster than the government originally thought. The Commerce Department on Thursday revised its estimate of gross domestic product up a full percentage point to 4.9 percent, topping analysts' consensus forecast for a 4.8 percent rise.

But most analysts believe the economy has cooled in the fourth quarter, putting consumer spending, the main engine of growth, at risk.

Dow Jones industrials futures lost 27, or 0.20 percent, to 13,280, while Standard & Poor's 500 index futures fell 4.90, or 0.33 percent, to 1,465.70, and Nasdaq 100 index futures fell 7.75, or 0.37 percent, to 2,087.75.

Investors gave the Dow its biggest two-day point gain in five years Tuesday and Wednesday after a Federal Reserve official suggested another interest rate cut could be in store. Wall Street also has been calmed by evidence that companies hurt by subprime problems have found financial backers to help stem the damage.

In the latest such action, E-Trade Financial Corp. said on Thursday that Citadel Investment Group will provide $2.5 billion in cash to shore up its balance sheet and said Chief Executive Mitchell H. Caplan has resigned.

E-Trade, which holds billions in risky mortgage debt, said it will sell its entire portfolio of asset-backed securities to Citadel for $800 million and book a $2.2 billion charge on the sale.

The two-day rebound followed Monday's triple-digit drop in the Dow, which pushed the index to a level 10 percent off its October high, the measure of a downward correction. But while the advance was impressive, Wall Street's performance since the summer has been highly erratic, with many triple-digit swings, and there were few if any predictions that stocks were now on a solidly upward path.

Oil prices spiked after a fire broke out late Wednesday at an Enbridge Energy pipeline carrying crude from Canada to the Midwest. The fire in northern Minnesota killed two workers and resulted in the shutdown of four pipelines before burning out Thursday.

A spokeswoman for owner Enbridge Energy said the pipelines could be closed for several days without disrupting the flow of supply because the company has oil in storage. Oil prices surged more than $4 a barrel before paring the gains as the flames subsided.

A barrel of light, sweet crude rose $2.51 to $93.13 on the New York Mercantile Exchange, after climbing as high as $95.17 earlier in electronic activity. The gains follow a two-day drop of more than $7 a barrel.

Overseas stock markets were mixed. Britain's FTSE 100 fell 0.01 percent; Germany's DAX index rose 0.26 percent and France's CAC-40 fell 0.27 percent. In Asia, Japan's Nikkei stock average closed up 2.38 percent. Hong Kong's Hang Seng
logo

Get The Daily Update!

Be among the first to get breaking news, weather, and general news updates from News on 6 delivered right to your inbox!

More Like This

November 29th, 2007

March 14th, 2024

December 4th, 2023

September 25th, 2023

Top Headlines

March 29th, 2024

March 29th, 2024

March 29th, 2024

March 28th, 2024