Stocks sink after weak jobs report; oil drops

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NEW YORK — An unexpected jump in claims for unemployment benefits and plummeting oil prices drove stocks lower early Thursday.

The government said the number of people applying for unemployment benefits for the first time rose to 429,000 last week, much higher than economists expected and the largest rise in four weeks. Applications have stayed above 400,000 for more than two months, the latest sign that hiring has weakened from earlier this year.

“400,000 is the magic number and we’ve been above it for 11 weeks,” said Lawrence Creatura, who manages a stock portfolio at Federated Investors. “This is no longer looking like a small soft patch. It’s beginning to look more like quicksand.”

Oil prices fell 5 percent after the International Energy Agency said 60 million barrels of oil would be released from reserves to make up for the loss of Libyan exports. That sent Exxon Mobil Corp., Chevron Corp. and other energy stocks sharply lower.

Lower oil prices squeeze the profits of oil producers but some companies stand to benefit from cheaper fuel costs. Airline stocks were mostly higher in midday trading. United Continental Holdings Inc. and AMR Corp, the parent company of American Airlines, both gained 5 percent. JetBlue Airways Corp. rose 1 percent.

Businessmen walk June 23, 2011, on Wall Street in New York. (Associated Press)

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Businessmen walk June 23, 2011, on Wall Street in New York. (Associated ... more >

The dollar rose against other currencies and commodities from gold to corn dropped.

Government bond prices were higher as traders shifted money into investments that are considered safe, pushing long-term interest rates lower. The yield on the 10-year Treasury note sank to 2.90 percent, its low mark for the year. Bond yields fall when their prices rise.

The Dow Jones industrial average lost 185 points, or 1.5 percent, to 11,925 in midday trading.

The S&P 500 index fell 18 points, or 1.4 percent, to 1,269. The Nasdaq fell 23 points, or 1 percent, to 2,645.

Portfolio manager Creatura says that the recent market slide could represent a chance to pick up some stocks on the cheap. Current prices already reflect reaction to most of the economy’s problems, he says. “The most fearful times can be the best times to invest,” he said. “It’s not only what you buy, it’s the price you pay that matters.”

Among the most active stocks, Bed Bath & Beyond gained 5 percent after the home furnishings retailer posted a 31 percent jump in income. The company also raised its earnings forecast for the rest of the year.

ConAgra Foods Inc. fell 2 percent. The owner of Slim Jim and Hebrew National brands cut its earnings estimate for the current quarter.

All three indexes closed lower Wednesday after Federal Reserve Chairman Ben Bernanke said problems plaguing the economy may last longer than previously thought. The Fed also lowered its forecast for U.S. economic growth this year. The Fed said it now expects the economy to grow between 2.7 percent and 2.9 percent this year, down from its previous estimate of slightly more than 3 percent.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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