Wall Street Posts Worst Week Since June With Fed in Mind

All but one of the 10 S&P 500 sector indexes ended lower.

The stock of J.C. Penney Co. skidded 5.8 percent to $12.87 and ranked as the S&P 500's biggest percentage decliner. Bill Ackman, the company's top investor, urged the retailer's board on Friday to replace its chairman.

Richard Fisher, president of the Federal Reserve Bank of Dallas, reiterated late Thursday that the central bank will probably begin cutting back on its massive bond-buying stimulus next month, as long as economic data continues to improve.

The lack of clarity over the Fed's plans gave investors reason to pull a record $3.27 billion out of U.S.-based funds that hold Treasuries in the latest week ended August 7, data from Thomson Reuters' Lipper service showed on Thursday.

"People are looking ahead to the September FOMC meeting and the prospect that the Fed begins its long-awaited exit strategy," said Michael Sheldon, chief market strategist at RDM Financial, in Westport, Connecticut.

The Dow Jones industrial average dropped 72.81 points, or 0.47 percent, to end at 15,425.51. The Standard & Poor's 500 Index declined 6.06 points, or 0.36 percent, to 1,691.42. The Nasdaq Composite Index fell 9.02 points, or 0.25 percent, to close at 3,660.11.

For the week, stocks posted their biggest declines since mid-June. The Dow fell 1.5 percent, snapping a six-week string of gains. The S&P 500 dropped 1.1 percent for the week and the Nasdaq slid 0.8 percent.

A week ago, both the Dow and the S&P 500 ended at record closing highs.

Stocks extended losses late in the session. President Barack Obama said he will make a decision on the nomination for the Federal Reserve chairman in the fall. Fed Chairman Bernanke is expected to step down when his second four-year term ends on January 31.

Bernanke rattled markets in late May by saying the Fed would begin to ease back on its stimulus program once the economy shows some improvement.

While many investors are concerned that economic growth will stall without the Fed's help, stock prices have been supported by some strong earnings and encouraging data overseas.

The S&P 500 is up 18.6 percent for the year so far.

In China, industrial output rose more than expected, adding to a string of data that indicated the economy may be stabilizing after an extended period of tepid growth.

U.S. economic data showed wholesale inventories unexpectedly fell 0.2 percent in June, marking a second straight month of declines, versus expectations calling for a gain of 0.4 percent.

U.S.-listed shares of BlackBerry Ltd jumped 5.7 percent to $9.76 after Reuters reported that the Canadian smartphone maker was warming to the idea of going private, citing sources familiar with the situation.

Priceline.com Inc, rose 3.9 percent to $969.89 a day after the online travel company reported earnings that beat expectations and gave a strong outlook. Some analysts speculate the stock's price will cross $1,000 soon, which would be a first for a Standard & Poor's 500 stock.

Earnings season is winding down, with 446 companies in the S&P 500 having already reported. Of those, 68 percent have exceeded analysts' expectations, slightly above the 67 percent beat rate over the past four quarters, Thomson Reuters data showed.

Volume was roughly 5.3 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, below the average daily closing volume of about 6.36 billion this year.

Decliners slightly outnumbered advancers on the NYSE by a ratio of about 15 to 14. On the Nasdaq, about three stocks fell for every two that rose.

(Editing by Nick Zieminski and Jan Paschal)

New Claims by Jobless Are Lowest Since 2007

WASHINGTON — A measure of Americans who applied for unemployment benefits over the last month has fallen to its lowest level in almost six years, signaling fewer layoffs.

The Labor Department said on Thursday that the average number of people who applied for benefits over the last four weeks dropped by 6,250, to 335,500. That is the lowest level since November 2007, the month before the Great Recession began.

The four-week average smooths week-to-week fluctuations.

Weekly applications for unemployment aid increased by 5,000 last week to a seasonally adjusted 333,000. But that is up only slightly from the previous week’s five-and-a-half-year low.

The decrease in the four-week average points to a positive trend in recent months. Applications, which are a proxy for layoffs, have fallen more than 10 percent since the start of the year. That has helped drive net job gains this year, which are the number of people hired minus the number who lose or quit their jobs.

Employers added 162,000 jobs last month, the smallest monthly gain since March. And most of the job growth came in lower-paying industries or part-time work. Since January, the economy has added an average of 192,000 jobs a month. But the pace has slowed to 175,000 in the last three months.

When employers are cutting few workers, as they are now, it does not take many hires to create a high net gain.

The job market is improving, largely because layoffs have fallen to pre-recession levels. But while employers are no longer cutting jobs, many remain reluctant to hire in the face of tax increases, federal spending cuts and slower global growth.

Fed Support Lifted Wall St. To Best Month Since January

After a day of stalled rallies, the stock market closed out July with its best monthly gain since January.

The Standard & Poor’s 500-stock index ended the month 4.95 percent higher. That was the biggest increase since January, when it rose 5.04 percent. The Dow Jones industrial average also had its best month since January.

Markets surged in July after the Federal Reserve chairman, Ben S. Bernanke, assured investors that the central bank would not curb its stimulus program until the economy was strong enough. The Fed is buying $85 billion of bonds a month to keep down interest rates to encourage borrowing and hiring.

On Wednesday, the Fed reaffirmed its commitment to support the economy in a statement released after the end of a two-day meeting. The central bank dropped hints that it might need to maintain its stimulus, and slightly downgraded its assessment of economic growth in the United States from “moderate” to “modest.”

That initially gave stocks a boost, pushing the S.& P. 500 within two points of breaching 1,700 for the first time, in afternoon trading. But the rally faded in the final hour, leaving the S.& P. flat at the end of the day.

Given the market’s big gains in July, stocks may struggle to climb further in the coming months, said Philip J. Orlando, chief equity market strategist at Federated Investors. “I would not be the least bit surprised to see some modest consolidation,” he said.

Stocks started higher on Wednesday after the government said that the economy grew at an annual rate of 1.7 percent in the second quarter as businesses spent more and the federal government cut less spending. Economists had expected growth of 1 percent, according to the data provider FactSet.

There was also an encouraging report on hiring ahead of the government’s monthly jobs survey due Friday. Businesses created a healthy 200,000 jobs in July, the payroll company Automatic Data Processing said, as companies hired at the fastest pace since December.

The S.& P. 500 ended little changed at 1,685.73. The Dow Jones industrial average fell 21.05 points, or 0.1 percent, at 15,499.54. The Nasdaq composite index rose 9.90 points, or 0.3 percent, to 3,626.37.

In the bond market, investors anticipated that the Fed’s slightly weaker assessment of the economy would imply a longer period of bond purchases. The price of the 10-year Treasury note rose 5/32, to 92 26/32, while its yield fell to 2.59 percent from 2.61 percent late Tuesday.

Conn. Public Sector Attorneys to Get First Raises Since 2009

A recent national study has found that pay for prosecutors and public defenders has barely budged since 2004. The situation is only a little better in Connecticut, where the public sector attorneys last got a raise in 2009.

But that's about to change. Next summer, Connecticut prosecutors and public defenders are slated to receive a 3 percent raise, adding about $1,850 annually to the current entry level salary of $61,900. Veterans with 10 years experience will see salaries increase from about $91,600 to about $94,000.

Jack Doyle, a prosecutor and president of the Connecticut Association of Prosecutors, the bargaining unit for the 250 prosecuting attorneys in the state, calls the raise overdue. He notes that other state workers have, overall, averaged 3.5 percent annual pay increases over the past decade.

"I can tell you prosecutors do believe they are underpaid and undercompensated, based on their jobs and what they do," Doyle said. "We don't get compensatory time or overtime or extra duty pay that police get. At the same time, prosecutors have been threatened, harassed and even attacked."

The issue of salaries for court personnel recently came to a head in Connecticut when Chief Justice Chase T. Rogers requested an 11 percent pay raise for judges next July, followed by 5.5 percent increases in each of the next three years. Her proposal, which was met with sharp questions by a newly formed Judicial Compensation Review Board, calls for Superior Court judges to go from earning $146,780 currently to $191,890 in 2017.

Rogers notes that Connecticut judges have not had a pay increase in five years and that their current salaries rank them 45th nationally, when adjusted for the cost of living. She says comparatively low salaries are driving experienced judges out of the court system and making it harder to attract top-notch lawyers to the bench.

The recent study, by the National Association for Law Placement, makes the same argument about low pay and the ability to attract and retain public sector lawyers. After all, the study notes, the starting median salary at private firms with 50 or more lawyers is about $80,000. And some large firms continue to pay $160,000 to new associates, the NALP said.

New prosecutors and public defenders in Connecticut make nearly $12,000 more than the national median of $50,000, according to the NALP. After 10 years, Connecticut pay increases to $91,627, while the national average is $76,000. In Connecticut, someone with 20 years' experience caps out at $129,000; the NALP did not provide a comparable figure.

While Connecticut salaries are significantly higher than the national average in raw dollars, the NALP does not factor in the cost of living in each state, as the judges' rankings do.

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Jobless Rate Falls to 7.8%, Lowest Since January 2009

While employers added only a modest 114,000 jobs last month, the jobless rate declined to 7.8 percent from 8.1 percent, even though more people entered the labor force.

Adding to the positive news, job gains were revised upward by 40,000 for July (to 181,000) and by 46,000 for August (to 142,000), which had been considered a disappointing month, casting a slightly rosier hue on the summer slowdown.

The private sector, which has been adding jobs since March 2010, grew by 104,000 workers in September. Governments, where cuts have been a drag on the recovery, added 10,000 jobs.

Manufacturing, one of the bright spots that Mr. Obama has showcased throughout the re-election campaign, fell 16,000 jobs after losing  a revised 22,000  in August, and construction jobs grew by 5,000. The number of temporary jobs, usually considered a harbinger of future growth, fell 2,000.

Coming a month before the presidential election, the jobs report offered ammunition for both sides as the candidates vie to convince voters that each is better equipped to steer the economy.

Mr. Obama can point to the 24th straight month of overall job growth after a severe financial crisis and a drop below the stubborn 8 percent jobless rate that has dogged his presidency. Republicans can — and did on Friday — continue to criticize the slow pace of improvement.

Mitt Romney, the Republican presidential challenger, took particular issue with any positive interpretation of the report.

“This is not what a real recovery looks like,” he said in a statement. “We created fewer jobs in September than in August, and fewer jobs in August than in July, and we’ve lost over 600,000 manufacturing jobs since President Obama took office.”

Representative Kevin Brady, a Republican from Texas and vice chairman of the joint economic committee, said the drop in the unemployment rate “was driven primarily by an increase of 582,000 in the number of workers employed involuntarily in part-time jobs. These workers need and want full-time jobs.”

“If not for all the people who have simply dropped out of the labor force,” Mr. Romney said in his statement, “the real unemployment rate would be closer to 11 percent.”

Representative Eric Cantor of Virginia, the majority leader, conceded that numbers were an improvement but added, “it simply isn’t good enough.” A jobless rate of 7.8 percent “should not be cause for celebration.”

Senate Majority Leader Harry Reid, Democrat from Nevada, countered that “with unemployment dropping below 8 percent to the lowest level in four years, our economy is on the right track.”

Consumers and businesses, too, seem to have divergent views of the economic situation. Consumers have shown increasing confidence as stocks rise and home prices stabilize.

Business leaders have been hanging back, though, more focused on global economic slowing and domestic concerns. They say they are uncertain what the election will mean for the business climate and are waiting in part for a resolution of the so-called fiscal cliff, a host of tax increases and budget cuts that will be triggered at the end of the year if Congress fails to act.

Harry Kazazian, the chief executive officer of Exxel Outdoors, a maker of camping equipment in Alabama, said the election, the fiscal cliff and rapidly shifting regulations had put him in a cautious mood.

With sales on the rise, Exxel has restarted a capital investment plan that it suspended three years ago, but is doing so slowly. “We’re moving forward, but we’re doing it in steps rather than being much more aggressive and putting ourselves out there,” Mr. Kazazian said. “I wouldn’t be surprised if things start turning the other way, meaning down.”

But at a Walmart in Atlanta, shoppers were loosening the reins a bit, buying what they described as small indulgences like scented candle oil and seasonal beer.

Linda Avery, 50, a food service manager, said her income had not changed but her daughter had moved out of the house, reducing her food and utility expenses.

John H. Cushman Jr. contributed reporting from Washington.