- The Washington Times - Friday, January 9, 2009

Wall Street closed mixed Thursday on fears of a worsening recession after Wal-Mart, the world´s biggest retailer, forecast lowered earnings because of ho-hum sales last month and a Labor Department report darkened the unemployment picture.

The agency´s Bureau of Labor Statistics reported that the number of people who receive jobless benefits jumped unexpectedly to 4.61 million in the last week of December, the highest level in more than 26 years.

At the same time, major nationwide retailers painted a bleak same-store sales picture for the Christmas holiday season that did not come as much of a surprise, though the sales figures from Wal-Mart Stores Inc. were lower than expected.

The Dow Jones Industrial Average closed down 27.24, or 0.31 percent, to 8,742.46. The tech-heavy Nasdaq rose 17.95, or 1.12 percent, to 1617.01. The broader Standard & Poor´s 500 inched up 3.08, or 0.34 percent, to 909.73.

All three indexes had been down from the opening bell through most of the day. The Nasdaq and S&P; 500 rallied toward the close.

The jobless and retail sales reports were released shortly before President-elect Barack Obama urged Congress at a news conference to act swiftly on his economic stimulus package, warning that “this recession could linger for years” if nothing is done and that “the unemployment rate could reach double digits.”

His address did not appear to have much of an impact on the market, which already may have digested his plan to aid the economy. The package could total $775 billion over two years.

In the job picture, new claims for unemployment benefits fell unexpectedly by 24,000 in the week ended Saturday to a seasonally adjusted 467,000. Economists had expected a much worse figure - 540,000.

But the total number of people who receive benefits climbed during the previous week, which ended Dec. 27, to 4.61 million, the most since November 1982, the Bureau of Labor Statistics reported. Analysts had expected the number to be 4.5 million.

The number of people who continue to claim unemployment benefits reflects the difficulty that dismissed workers are having in finding new jobs.

The Labor Department is to issue its monthly unemployment report Friday. It may show that the number of jobless in December climbed from the current 6.7 percent to 7 percent.

In the retail sector, Wal-Mart said its December same-store sales over December 2007 inched up 1.7 percent, including a 1.9 percent increase at Wal-Mart and a 0.1 percent rise at Sam´s Club. But analysts polled by Thomson Reuters expected an increase of sales, on average, of 2.8 percent.

The giant retailer said it now expects its earnings from fourth-quarter continuing operations to be 91 cents to 94 cents per share, down from the previous forecast of $1.03 to $1.07 per share. Analysts expected $1.06.

Generally, same-store sales nationwide in December fell 1.7 percent on a year-over-year basis, the International Council of Shopping Centers reported. Its report is based on a preliminary tally of 36 retail chains.

When sales for November and December are combined, they show a 2.2 percent decline compared with the same period the previous year - the biggest such drop since the organization started tracking such data in 1970, an ICSC spokeswoman told The Washington Times.

Michael P. Niemira, ICSC´s chief economist and director of research, said in a statement that the past November-December period “was an extraordinarily difficult holiday season.

“Retailers were forced to slash prices to entice consumers to spend. But even that strategy was not enough as the elevated worry about job insecurity and increased job layoff announcements continued to restrain consumers´ willingness and ability to spend.”

Overall, 2008 “posted its smallest gain since at least 1970,” ICSC said in a statement. The gain was 1 percent over 2007.

Other chains that wracked up losses for December compared with December 2007, according to ICSC, included Target Corp., a Wal-Mart competitor, 4.1 percent; Sears, 12.8 percent; Limited, 10 percent; Gap, 14 percent; Nordstrom, 10.6 percent; and J.C. Penney, 8.1 percent.

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