Financial Headline News for Thursday 8/4

Stocks plunged all day from the opening bell to close with the Dow down an amazing 4.31%! From the end of the bogus program known as QE2 on June 30th, the Dow has fallen from 12,414.34 to 11,383.68. Any thought of QE3 Mr. Bernanke to manipulate the dollar and the stock market?

For the 17th consecutive week unemployment claims topped the 400K mark coming in at an even 400K.

Now its Italy's turn in the European Financial Crisis.

Here are the top financial stories of the day:

1) Wall Street’s Awful Day by the Numbers-From Yahoo Finance

The Dow Jones Industrial Average had its worst point decline -- and 10th drop overall in 11 days -- in almost three years on Thursday as worries about the economy, in both the U.S. and around the world, continued to grow. The Dow hasn't closed this low since December, and it hasn't seen an intraday drawdown this fierce since the flash crash of May 2010.

Selling was widespread on Wall Street, and investors struggled to find safety. Everywhere you turned, almost regardless of stock, sector or asset class, the direction was downward. The Dow is now lower by 1.67% for the year, according to data from Dow Jones Indexes, and is in a correction owing to a close that's 10% under its recent high.

Here's a quick look at some of the key numbers at the end of what was a brutal day in New York trading:

-Dow Jones Industrial Average (^DJI): Down 512.76 points, or 4.31%, to 11,383.68
-S&P 500 (^GSPC): Down 60.27 points, or 4.78%, to 1200.07
-Nasdaq Composite (^IXIC): Down 136.68 points, or 5.08%, to 2556.39
-Russell 2000 (^RUT): Down 45.98 points, or 5.95%, to 726.80
-S&P 500 Volatility Index (^VIX): Up 8.28, or 35.41%, to 31.66
-Number of Dow stocks that fell: 30 (out of 30)
-Worst Dow stock on a percentage basis: Alcoa (AA), down 9.26% to $12.94
-Best-performing Dow stock on a percentage basis: McDonald's (MCD), down 1.47% to $82.48
-Percentage of stocks that fell on the New York Stock Exchange: 91
-Percentage of stocks that fell on the Nasdaq: 91
-Oil prices: Down $5.49, or 5.97%, to $86.44 (4 p.m. ET)
-Gold prices: Down $12.60, or 0.76%, to $1,650.80 (4 p.m. ET)

As for sectors of the market, the downturn was just as evident:
-Banks: Dow Jones U.S. Banks Index (^DJUSBK), down 10.85 points, or 5.52%, to 185.72
-Semiconductors: Philadelphia Stock Exchange Semiconductor Index (^SOX), down 22.07 points, or 5.82%, to 357.32
-Computer hardware: Amex Computer Hardware Index (^HWI), down 17.25 points, or 5.14%, to 318.14
-Transportation: Dow Jones Transportation Average (^DJT), down 255.44 points, or 5.14%, to 4711.74
-Retail: S&P Retail Index (^RLX), down 23.04 points, or 4.47%, to 492.68
-Homebuilders: Philadelphia Stock Exchange Housing Sector Index (^HGX), down 5.50 points, or 5.70%, to 90.95
-Energy: Amex Oil Index (^XOI), down 83.91 points, or 6.79%, to 1151.53
-Biotechnology: Amex Biotechnology Index (^BTK), down 135.86 points, or 10.61%, to 1144.93
-Drug companies: Amex Pharmaceutical Index (^DRG), down 12.49 points, or 3.98%, to 301.63
Here's how a few widely held tech stocks fared (this will probably look familiar):
-Apple (AAPL): Down $15.20, or 3.87%, to $377.37
-Microsoft (MSFT) Down 98 cents, or 3.64%, to $25.94
-Cisco (CSCO) Down 67 cents, or 4.33%, to $14.82
So now what? Here's one idea, albeit complex, that appears to have been working lately: An ETF For Our Troubled Age: Double-Long Gold, Double-Short Stocks. Certainly not for everyone, but it's a good read.

2) Jobless claims edge down last week-From Reuters

 New claims for unemployment benefits were little changed last week, a government report showed on Thursday, pointing to a marginal improvement in the labor market.

Initial claims for state unemployment benefits nudged down 1,000 to a seasonally adjusted 400,000, the Labor Department said.

Economists polled by Reuters had forecast claims rising to 405,000. The prior week's figure was revised up to 401,000 from the previously reported 398,000.

The claims data falls outside the survey period for the government's closely monitored employment report for July, which is scheduled for release on Friday.

Nonfarm payrolls likely increased 85,000 last month, according to a Reuters survey, after rising only 18,000 in June. The unemployment rate is expected to hold steady at 9.2 percent.

The labor market is being anxiously watched for signs whether the economy will regain speed after growth stalled in the first half of this year. Gross domestic product grew at an annual pace of 1.3 percent in the second quarter after a negligible 0.4 percent rate in the January-March period.

Data so far show the anemic growth pace persisted early in the third quarter, with manufacturing activity hitting a two-year low in July and the services sector expanding at its slowest pace in nearly 1-1/2 years.
Jobless claims are hovering around 400,000 and need to decisively break beneath that level to signal a sustainable improvement in the labor market.

A Labor Department official said there was nothing unusual in the data, adding there was no indication that a partial shutdown of the Federal Aviation Administration had affected last week's claims.

An impasse in Congress over the funding of the FAA has halted airport construction and inspections programs employing about 74,000 workers.

The four-week moving average of claims, considered a better measure of labor market trends, fell 6,750 to 407,750-the lowest since mid-April.

The number of people still receiving benefits under regular state programs after an initial week of aid rose 10,000 to 3.73 million in the week ended July 23.

The number of Americans on emergency unemployment benefits increased 12,193 to 3.18 million in the week ended July 16, the latest week for which data is available.

A total of 7.57 million people were claiming unemployment benefits during that period under all programs, down 75,192 from the prior week.

3) Italy's Woes Weigh on Europe-From The Wall Street Journal 

Italian Prime Minister Silvio Berlusconi resisted calls for a swift economic overhaul, heightening worries that the world's eighth-largest economy is sliding into the sort of debt distress that has laid low its smaller European neighbors.

Instead, Mr. Berlusconi blamed global market turbulence for the current spotlight on Italy. Meanwhile, José Manuel Barroso, the president of the European Commission, the European Union's executive arm, released a blistering statement calling the weakening bond prices of Spain and Italy "a cause of deep concern" and urging governments to signal "resolve to address the sovereign debt crisis with the means commensurate with the gravity of the situation."

Meanwhile, Japan and Switzerland took action to hold down the rise of their currencies, where investors for months have been seeking refuge from financial-market turmoil. Tokyo intervened Thursday morning in markets to stem the rise of the yen against the dollar, hoping to preserve modest economic growth that is threatened by a soaring currency undermining exporters. On Wednesday, the Swiss National Bank cut interest rates to nearly zero and pledged to pump billions of newly minted francs into markets, calling its currency "massively overvalued."

Just two weeks after Europe's leaders agreed to a long-awaited second bailout for Greece—considered the Continent's sick man for more than a year—investors are now turning their attention to Italy, the euro-zone's third-largest economy. Italy's debt as a proportion of economic output is second only to Greece's in Europe, and has been plagued by slow growth for more than a decade.

By the end of trading on Wednesday, the yield on 10-year Italian bonds stood at 6.07%. That makes it more expensive for Italy to borrow money, with investors demanding a premium of 3.66 percentage points over benchmark German bonds. Borrowing costs in Spain—long considered the next most vulnerable euro-zone economy after Greece, Portugal and Ireland, which have already received official bailouts—also continued to rise, with the yield on 10-year Spanish bonds closing at 6.23%.

Making things worse are signs that even Europe's stronger economies—Germany, France and the Netherlands—might be headed for a bout of weakness. After expanding at an annualized pace of more than 3% in the first quarter, the euro zone is estimated to have grown at less than half that in the second. Purchasing-manager reports for July suggest euro-area manufacturing was broadly flat to start the third quarter.

Even Germany's manufacturing purchasing managers' index fell to a two-year low last month. That is far from double-dip territory, but it means Europe's largest economy will have to grow well above historic norms to keep the euro bloc chugging along.

Lower growth makes it harder for heavily indebted economies to escape their debt burdens.

Hints that the weakness is starting to affect the euro zone's hitherto stronger economies will heighten the dilemma facing the European Central Bank, which holds a regular meeting Thursday and has begun tightening policy to make sure it keeps inflation in check.

Many had hoped Mr. Berlusconi would show more resolve on Wednesday in his speech to Parliament. Economists and investors have called on the Italian government to show new efforts to revive growth, which is hampered by tight labor laws, high taxes and crippling bureaucracy.

Over the past few days, Italian business leaders had called for a further strengthening of a €40 billion ($57 billion) deficit-busting plan that Parliament approved two weeks ago. Taking a strong stand, some said, would also appease market concerns over the cohesion of the Italian government, which has been put into doubt over reports that Finance Minister Giulio Tremonti might resign—something he has so far denied.

"We have a huge problem of credibility in the country. We need leadership capable of restoring cohesion," Sergio Marchionne, chief executive of Fiat SpA and Chrysler LLC, said in an interview with Italian news agency ANSA before the premier's speech.

Mr. Berlusconi said the rise in Italy's borrowing costs was due to market tensions related to the drawn-out debt talks in Washington, and said markets were failing to consider the high level of savings among Italian families and the strength of local banks, which he said had weathered the financial crisis better than their European peers.

"As often happens in a crisis of confidence, the markets are not correctly valuing the merit of our credit," Mr. Berlusconi said. "Our economy is healthy. The country is economically and financially solid."

The address "did not contain anything specific to turn market sentiment decisively," said Fabio Fois, an analyst with Barclay's Capital. "The government should reopen the reform agenda, as markets have been increasingly focused on the prospects of the real economy."

One reason Italy, which for months had been shielded from the debt crisis, has taken center stage is that it is generally considered too large for the rest of Europe to bail out.

Already, the means for future bailouts are in doubt. The euro zone has for months planned to expand its main rescue fund to €440 billion in lending capacity from around €250 billion, but that measure requires ratification by national parliaments—unlikely before fall. An agreement in July by national leaders to imbue the fund with new powers to intervene and to lend to countries not at the brink of bankruptcy hasn't been put into action either.

Quote of the Day from Dave Ramsey.com:

Today, the greatest single source of wealth is between your ears. Today, wealth is contained in brainpower, not brute power. — Brian Tracy