US stocks closed slightly lower on Thursday, snapping a seven-day winning streak, despite a late-session boost from news about a halt in the BP oil leak in the Gulf of Mexico and expectations of a settlement between Goldman Sachs and regulators.
Blue-chip stocks declined as disappointing economic data and the passage of a major financial-overhaul bill weighed.
The Dow Jones Industrial Average fell 7.41 points (0.07%) to 10,359.31. The measure's weakest components were clustered in the financial sector, with insurer Travelers off $1.09 (2.1%) to $50.30, Bank of America down 28 cents (1.8%) to $15.39, and American Express off 27 cents (0.6%) to $43.43. The companies were hurt by concerns over the potential impact on their profitability from regulatory overhaul after the Senate approved a wide-ranging overhaul of the nation's financial regulations. The measure, once implemented, will touch all areas of the financial markets.
JP Morgan was the Dow's lone financial component to end the session in the black. The big bank's stock edged up 11 cents (0.3%) to $40.46, after the company posted strong second-quarter earnings as it recovered from wounds caused by soured loans.
The Nasdaq Composite slipped 0.76 (0.03%) to 2,249.08. The Standard & Poor's 500 eked out a gain of 1.31 (0.12%) to 1,096.48.
Investors were disappointed earlier in the session by fresh signs of a moderation in the economy, with measures of manufacturing activity in the New York and Philadelphia areas coming in below expectations.
Stocks got a big bounce late in Thursday's session after the Securities and Exchange Commission announced plans to make a "significant" announcement after the close. Investors speculated that a settlement between the regulator and Goldman Sachs might have been reached, and their suspicions proved true after the SEC said Goldman agreed to pay $550m to settle charges that it misled investors in a subprime mortgage product.
Also lifting stocks late in the day, BP said the flow of oil into the Gulf of Mexico stopped during a test to see whether a recently placed cap on the well can entirely seal it off. American depositary shares of BP jumped $2.74 (7.6%) to $38.92.
Among other stocks in focus, NBTY surged $16.27 (43%) to $53.74, after the vitamin and nutritional-supplement maker agreed to be acquired by private-equity firm Carlyle Group in a deal valued at $3.5bn, one of the largest transactions to take a public company private since the credit bubble burst.
Landstar System declined 77 cents (1.9%) to $40.70. The trucker's second-quarter profit grew 37% on better-than-expected revenue growth, but the lower end of its third-quarter earnings guidance was below Street estimates.
Mylan climbed 47 cents (2.6%) to $18.32, after the generic-drug maker said it plans to pay $550m in cash for Bioniche Pharma Holdings to gain entry to the North American injectables market. The acquisition of privately held Bioniche is expected to increase Mylan's earnings in the first year after closing.
American depositary shares of National Bank of Greece jumped 16 cents (6.2%) to $2.76, after Greece's fourth-largest lender by assets, Piraeus Bank SA, said it will offer EUR701m to acquire controlling stakes in two Greek government-controlled banks. Investors saw the move as a big boost for Greek banks, potentially indicating more mergers could be on the way.
WW Grainger rose $3.14 (3%) to $106.89, after the industrial-equipment provider posted a 40% jump in second-quarter profit on improved sales. The company also boosted its 2010 earnings and revenue forecast.
For Australian ADRs listed on the NYSE, BHP Billiton strengthened 33 cents (0.49%) to US$67.50, Rio Tinto Plc fell 46 cents (0.97%) to US$47.12, ResMed increased 3 cents (0.04%) to US$66.84, Telstra Corporation climbed 14 cents (0.97%) to US$14.59, Telecom Corporation of NZ weakened 13 cents (1.85%) to US$6.89 and Westpac increased 2 cents (0.02%) to US$99.97.
In economic news, Weekly jobless claims fell to their lowest level in two years, while subdued inflation suggests the Federal Reserve will maintain its ultra-accommodative monetary policy for the foreseeable future. Industrial production rose slightly.
At 7:45 AM (AEST), the 10-year Treasury note yield was 2.99% and the five year yield was 1.76%.
European stocks fell on Thursday, as manufacturing data rekindled worries about US economic growth, outweighing strong results from banking giant JP Morgan Chase & Co.
The Stoxx Europe 600 index ended down 1.2% to 252.97 after moving in and out of negative territory several times earlier in the session.
Manufacturing activity grew at a slower pace in July than in June in both the New York and Philadelphia regions, data showed. The Philly Fed index, for instance, fell to 5.1 in July from 8.1 in June, while economists expected an increase to 10 in July.
Stocks on Wall Street posted losses in the wake of the data, with the Dow Jones Industrial Average falling 86 points in late morning trade.
The major European indexes followed Wall Street lower. Germany's DAX index fell 1% to 6,149.36 and France's CAC-40 index declined 1.4% to 3,581.82. The UK's FTSE 100 index dropped 0.8% to 5,211.29.
In the pharmaceutical sector, Novartis AG said second-quarter profit rose to $2.4bn, but its shares joined the broad-based sell-off.
Shares of GlaxoSmithKline PLC rose 1.8% after a panel of the Food and Drug Administration said its Avandia diabetes medication could stay on the market with further changes to its label. Separately, Glaxo announced it will record a legal charge of GBP1.57bn in the second quarter.
Shares of BP gained 0.2% in London trade. The firm received government approval to pressure-test the latest containment system on its blown Gulf of Mexico oil well. Meanwhile, the US House committee on natural resources has agreed measures that would prevent BP from new offshore drilling for seven years.
On the FTSE 100, Rio Tinto dropped 104.00 pence (3.32%) to 3,030.50 pence and BHP Billiton shed 21.50 pence (1.16%) to 1,833.20 pence.
Asian markets ended mostly lower on Thursday, with Chinese bank stocks falling on a poor debut for Agricultural Bank of China's Shanghai-listed shares. Resource stocks broadly declined on concerns slower-than-expected Chinese economic growth might dampen commodities demand.
Mixed reaction emerged to China's latest economic data. The nation's gross domestic product rose 10.3% on-year in the second quarter, from the first quarter's 11.9% growth rate, and undershot market expectations centred on a 10.5% increase. The country's consumer price index rose 2.9% in June, easing from May's 3.1% rise and well below economists' expectations of a 3.3% increase.
New Zealand shares ended down as profit-taking in Telecom New Zealand Ltd. weighed on the market. The NZX-50 Index closed down 0.8%, or 25.12 points at 3,002.32 points.
Base metals on the London Metal Exchange ended mixed with analysts predicting no aggressive moves in either direction for the time being.
Aluminium rose $20 (1.01%) to $2,010 while copper remained unchanged at $6,645 and nickel firmed $55 (0.28%) to $19,375. Zinc fell $5 (0.27%) to $1,825 and lead weakened $15 (0.83%) to $1,795. Comex copper was last quoted at 302.15 US cents per pound.
Gold futures ended with small gains, but were largely unchanged as a set of mixed US and Chinese indicators clouded an already hazy economic picture. Spot gold was last quoted at $1,207.80. Comex gold futures gained $1.30 (0.11%) to $1,208.30. Spot silver was last quoted at $18.28.
Crude-oil ended lower after fresh signs of a slowdown in the US and as stocks fell, while natural gas futures soared 6.5%, their biggest one-day rise since December. West Texas Intermediate was last quoted at US$76.76 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.7733 euros, 87.46 yen, 1.131 AUD and 64.78 pence.