Dour economic data and mixed earnings announcements gave market participants an excuse to sell stocks and take profits this session. Stocks finished 3.3% lower, ending a four-session streak of gains. Stocks are still up 1.6% week-to-date, though.
Thursday's mood wasn't helped by news that December durable goods orders declined 2.6%, marking the fifth straight monthly decline. Excluding transportation, orders were down 3.6%. The drop in both readings was also steeper than expected.
In other economic news, December new home sales declined more than expected, falling almost 15% from the prior month. The supply of new homes is at an all-time high of nearly 13 months, based on the pace of current sales. Demand for new homes remains weak as weak labor markets limit buyers. Initial jobless claims for the week ended Jan. 24 increased modestly to 588,000, which exceeded the 575,000 claims expected. Continuing claims climbed to 4.78 million, which is the highest level for continuing claims in 40 years.
To help stimulate the ailing economy, the U.S. House of Representatives has approved an $819 billion stimulus plan. Meanwhile, government officials have discussed spending a separate $1 trillion to $2 trillion to help banks restore their health, according to The Wall Street Journal.
With banks at the center of economic concerns, financial stocks continue leading the broader market. Financials tumbled 8.4% to finish at their session low. Losses were widespread in the sector, but life and health insurers (-11.4%) saw some of the worst selling as Allstate (ALL 23.50, -6.14) missed analysts' consensus earnings estimate.
With a market cap that's more than double the collective market caps of the Dow's four financial firms, Exxon Mobil (XOM 77.00, -2.25) was the heaviest weight on the broader market this session. It was also a laggard in the Dow. Exxon reports its latest quarterly results ahead of tomorrow morning's opening bell.
Fellow Dow component 3M (MMM 56.43, +1.01) posted better-than-expected quarterly earnings results, but lowered its 2009 earnings outlook. The revised outlook is still in-line with estimates, though. It finished the session as a relative leader.
In other earnings news, Qualcomm (QCOM 34.55, -2.27) fell short expectations, while Ford (F 1.95, -0.08) reported a loss, as expected, but is drawing on its credit lines. Eli Lilly (LLY 37.97, -1.12) and Colgate-Palmolive (CL 65.22, +1.37) both beat expectations, as did utilities American Electric (AEP 32.70, +0.94) and Dominion (D 36.21, +0.52). Amazon.com Inc. (AMZN) advanced 13 percent to $56.63. The largest Internet retailer reported more fourth-quarter profit and sales than analysts estimated after promotions and discounts lured consumers to its Web site. Reports Q4 EPS $0.52 vs Reuters $0.39. Company reports revenues of $6.70B vs Reuters $6.43B. Guides Q1 revenues to $4.525-$4.925B vs Reuters $4.51B.
Without any true leadership, the stock market finished near its session lows. All 10 sectors in the S&P 500 finished in the red.
Investors now turn their focus to the advance fourth quarter GDP report, which is due tomorrow morning (8:30 AM ET). Given the challenges facing the economy, the consensus forecast calls for a 5.5% annualized fourth quarter decline in GDP.
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