* Stocks post biggest two-day drop since November
* Initial jobless claims rise, Philly Fed well below
* Euro-zone business activity disappoints
* Wal-Mart climbs after earnings, Safeway soars
* Dow off 0.3 pct, S&P 500 off 0.6 pct, Nasdaq off 1 pct
By Edward Krudy
NEW YORK, Feb 21 U.S. stocks fell for a second
straight day on Thursday and the S&P 500 posted its worst
two-day loss since November after reports cast doubt over the
health of the U.S. and euro-zone economies.
But a late-day rally helped stocks erase some of their
losses with most of the pullback concentrated in the technology-
heavy Nasdaq. The move suggested investors were still willing to
buy on dips even after the sharp losses in the last session.
In Europe, business activity indexes dealt a blow to hopes
that the euro zone might emerge from recession soon, showing the
downturn across the region's businesses unexpectedly grew worse
"The PMI numbers out of Europe were really a blow to the
market," said Jack De Gan, chief investment officer at Harbor
Advisory in Portsmouth, New Hampshire. "The market was expecting
signs that recovery is still there, but the numbers just
highlighted that the euro-zone problem is still persistent."
U.S. initial claims for unemployment benefits rose more than
expected last week while the Federal Reserve Bank of
Philadelphia said its index of business conditions in the U.S.
mid-Atlantic region fell in February to the lowest in eight
Gains in Wal-Mart Stores Inc shares helped cushion
the Dow. The shares gained 1.5 percent to $70.26 after the
world's largest retailer reported earnings that beat
expectations, though early February sales were sluggish.
The Dow Jones industrial average fell 46.92 points,
or 0.34 percent, to 13,880.62 at the close. The Standard &
Poor's 500 Index lost 9.53 points, or 0.63 percent, to
1,502.42. The Nasdaq Composite Index dropped 32.92
points, or 1.04 percent, to close at 3,131.49.
The two-day decline marked the U.S. stock market's first
sustained pullback this year. The Standard & Poor's 500 has
fallen 1.8 percent over the period and just managed to hold the
1,500 level on Thursday. Still, the index is up 5.3 percent so
far this year.
The abrupt reversal in markets, which started on Wednesday
after minutes from the Federal Reserve's January meeting
suggested stimulus measures may end earlier than thought, looks
set to halt a seven-week winning streak for stocks that had
lifted the Dow and the S&P 500 close to all-time highs.
Wall Street will soon face another test with the upcoming
debate in Washington over the automatic across-the-board
spending cuts put in place as part of a larger congressional
budget fight. Those cuts, set to kick in on March 1 unless
lawmakers agree on an alternative, could depress the economy.
Semiconductor stocks ranked among the weakest of the day,
pressuring the Nasdaq as the Philadelphia Semiconductor Index
fell 1.8 percent. Intel Corp fell 2.3 percent to
$20.25 while Advanced Micro Devices lost 3.7 percent to
$2.60 as the S&P 500's biggest percentage decliner.
The Dow also got a helping hand from personal computer maker
Hewlett-Packard Co, which rose 2.3 percent to end the
regular session at $17.10. The company was scheduled due to
report first-quarter results after the closing bell.
Shares of Boeing Co rose 1.6 percent to $76.01 as a
senior executive was set to meet with the head of the U.S.
Federal Aviation Administration on Friday and present a series
of measures to prevent battery failures that grounded its 787
Dreamliner fleet, according to a source familiar with the plans.
In other company news, shares of supermarket operator
Safeway Inc jumped 14.1 percent to $22.97 after the
company reported earnings that beat expectations.
Shares of VeriFone Systems Inc tumbled nearly 43
percent to $18.24 after the credit-card swipe machine maker
forecast first- and second-quarter profits well below
Of the 427 companies in the S&P 500 that have reported
results so far, 69.3 percent have exceeded analysts'
expectations, compared with a 62 percent average since 1994 and
65 percent over the past four quarters, according to Thomson
Reuters data through Thursday morning.
Fourth-quarter earnings for S&P 500 companies are estimated
to have risen 5.9 percent, according to the data, above a 1.9
percent forecast at the start of the earnings season.
Berry Petroleum Co jumped 19.3 percent to $46.02
after oil and gas producer Linn Energy LLC said it
would buy the company in an all-stock deal valued at $4.3
billion, including debt. Linn Energy shares advanced 2.8 percent
About two stocks fell for everyone that rose on the New York
Stock Exchange and Nasdaq. About 7.64 billion shares changed
hands on the New York Stock Exchange, the Nasdaq and NYSE MKT,
well above the 20-day moving average of around 6.6 billion