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The market’s August lull nears an end; stocks fall
NEW YORK (AP) — The stock market's late-summer lull is about to end.
Stocks fell Thursday, with investors too worried about high gas prices and stagnant employment to be impressed by higher consumer spending.
But trading volume was light, the market's direction was steady, and there wasn't much in the way of major economic news.
That could all change Friday. Federal Reserve Chairman Ben S. Bernanke is scheduled to speak at 10 a.m. EDT, and investors will be listening closely for his opinion on the economy and whether the Fed will take more action to try to prop it up.
Scott Freeze, president of Street One Financial in Huntingdon Valley, Pa., had the feeling that he was experiencing the calm before the storm. He went golfing Thursday morning with clients, figuring there wouldn't be many more chances to leave the office.
Many of his employees and clients planned to come to work Friday morning, stick around to see what Mr. Bernanke says, and then leave early for the long weekend if it's nothing of consequence.
"There's so little going on, it's all wait and see before Bernanke's speech," Mr. Freeze said. "I'm sure next week will be a much different scenario."
Others thought Bernanke's speech would be a non-event. The statements that Fed officials make are often ambiguous, and there's a lot of doubt that the Fed can do anything for the economy that would make a difference anyway.
"Some people hang on every word; they try to figure out what kind of briefcase he's carrying," said John Lekas, senior portfolio manager at Leader Capital in Portland, Ore. "I think that's a waste of time. It doesn't matter that much."
For much of August, with many traders on vacation and a dearth of major economic news, the market has lumbered more than galloped. Since the start of last week, about 2.8 billion shares, on average, have traded each day on the New York Stock Exchange. Before then, the average daily volume so far this year was 25 percent higher, at 3.8 billion shares.
By midafternoon Thursday, the Dow Jones industrial average was down 87 points to 13,020. The Standard & Poor's 500 was down nine to 1,401. The Nasdaq composite was down 28 to 3,053.
Investors were unimpressed by the economic news that did surface Thursday.
The government reported that consumer spending rose in July from June, at the fastest pace in five months. Retailers such as Target Corp., Costco Wholesale Corp., Limited Brands Inc. and Macy's Inc. reported higher-than-expected August sales.
But rather than send stocks up, investors instead worried that the gains wouldn't last long. Gas prices are spiking because of Hurricane Isaac and hit a national average of $3.83 per gallon. The four-week moving average for unemployment claims also ticked higher, the government reported. Gas prices and job security are key when people decide how much they can spend.
Mr. Freeze, from Street One, doubts the jobs picture will improve soon, with so many companies not hiring. He thinks it's disingenuous when they blame the uncertainty of not knowing who will be president next year.
"They're saying, 'I don't know what my tax situation will be,' or 'I don't know if Obama will be president and I don't want to deal with Obama's health care plan,'" he said. "I think these are just easy excuses for the corporations to use, because quite frankly the production levels and the revenue they're generating don't warrant hiring new employees."
Among the stocks that did make notable moves:
• Pandora Media Inc. jumped 20 percent, rising $2.05 to $12.13. The Internet radio company reported big increases in revenue from advertising and subscriptions and from listeners accessing the website from mobile devices.
• TiVo Inc., known for its digital video recorders, fell more than 3 percent, losing 34 cents to $9.02, after reporting an expanded quarterly loss and missing analysts' revenue predictions.
• Vera Bradley, the maker of high-end handbags, lost 9 percent, slipping $2.12 to $21.50. Weak sales in May and June forced the company to cut its earnings and revenue predictions for the year.
By Tom Fitton
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