An unexpected rise in US initial jobless claims and persistent worries about the Greek economy weighed on Wall Street at the open.
Hopes of a sustainable recovery in the beleaguered US labour market were dented today after an official government report revealed that the number of Americans claiming first-time jobless benefits rose by 18,000 to 460,000 in the week ending 3 April - a sharp contrast with the expected drop to 435,000 from last week's 439,000.
The rise also took the four-week moving average for initial jobless claims, a preferred gauge, up by 2,250 to 450,250 last week. Investors shouldn't look too much into these figures, however, as jobless claims have historically proven to be rather volatile in the run up to Easter and the two weeks that follow.
On an encouraging note, the report showed the number of Americans receiving jobless benefits for more than a week (continuing jobless claims) falling by 131,000 to 4.55 million in the week ending 27 March, the lowest figures this year. (The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.) The number of people who used up their traditional benefits and are now collecting emergency and extended payments fell by around 223,000 to 5.81 million in the week ending March 20. In addition, the unemployment rate among people eligible for benefits fell to 3.5% in the week ending March 27.
The Dow Jones Industrial Average traded 16.78 points (-0.15%) below its previous close at 10880.74 at around 3:50pm (London time), while the broader S&P 500 fell 1.94 points (-0.16%) lower at 1180.51.
Airline shares were in demand today, with UAL Corp rallying 8% to $20.47 and US Airways Group surging 12% to $7.64 on rumours that they were again in merger discussions. Continental Airlines, meanwhile, gained 3.8% to $21.29
Easter US retail sales were also in focus today, with Gap's shares up 2.5% to $24.45 after unveiling an 11% rise in same-store sales in March. Meanwhile, Target Corp climbed 2.7% to $55.49 after reporting that its net retail sales for the five weeks ending 3 April rose by 12.5% compared to the same period a year ago. Like-for-like store sales increased 10.3% in March.
Overall, US same-store sales rose 9.1% in March, ahead of expectations for a 6.3% increase, according to data from Thomson Reuters. More than 90% of the 28 retailers that Thomson Reuters tracks topped estimates.
Back home, the Bank of England obeyed expectations by keeping interest rates unchanged at 0.5% and refusing to increase the size of its quantitative easing programme. Investors wishing to obtain further insight into today's decision will want to read the minutes that are scheduled for release at 9:30am (London time) on Wednesday 21 April. There weren't any surprise policy decisions by the European Central Bank either. At 12:45pm (London time), the central bank kept interest rates unchanged at a record low of 1%. In a press conference following the rate decision, ECB President Jean-Claude Trichet said he doesn't expect Greece to default on its debt. 'I would say that taking all the information I have, a default is not an issue for Greece,' Mr Trichet told reporters in Frankfurt today. He also said the Greek economy probably won't need financial aid from the European Union. Regarding interest rates, Mr Trichet said he believes that interest rates are at 'appropriate' levels, meaning the central bank is in no rush to tighten monetary policy as a result of what's happening in Greece.
The euro was little changed following Trichet's remarks, trading at $1.3340 at 3:00pm (London time), while the yield on the 10-year Greek government bond traded at 7.353%, down from an earlier high of 7.5%.
