MarketView for February 10

Summary 

The S&P and Nasdaq stock indexes chalked up small gains in the final minutes of trading on Thursday as Egyptian President Hosni Mubarak said he would delegate powers to the vice president, though he stopped short of resigning. At the same time, the Dow Jones industrial average was slightly lower at the closing bell, breaking an eight-day rally Cisco reported revenues and earnings that were less than the Street was looking for.

The S&P and Nasdaq wavered in volatile late-day action as Mubarak began a speech in response to the weeks of civilian protests. Earlier in the day, as media reports spread that Mubarak might resign, equities rebounded off early lows sparked by the disappointment over Cisco. The more than two weeks of protests in Egypt have created concern among global investors on fears that political instability could spread through the region and impact commodities.

The Van Eck Market Vectors exchange-traded fund ended the day up 0.45 percent, lowering its gains late in the day when it appeared that Mubarak was not stepping down. Previously, the fund had risen as much as 5.8 percent.

Volume on Wall Street was stronger than in recent days, which had seen some of the lowest volume numbers of the year. However, with a total of about 8.15 billion shares traded on the major eexchanges, volume was still below last year's daily average of 8.47 billion.

Cisco fell 14 percent to $18.92 on heavy volume a day after reporting its quarterly numbers, but chief competitors surged as investors see Cisco losing market share. One example was Juniper Networks, which ended the day up 7.6 percent to close at $43.40.

Also weighing on the Dow was Wal-Mart, which fell 2 percent to $55.59 after UBS downgraded the stock to "neutral" from "buy." UBS said a sales recovery at the retail giant could take longer than expected.

New U.S. claims for unemployment insurance fell to their lowest level in 2-1/2 years, the government reported on Thursday, in a sign the labor market was improving.

A report from the Commerce Department showed wholesale inventories rose 1 percent to their highest since January 2009. Wholesale inventories, excluding autos rose much less than the government had anticipated in its advance estimate. December's trade report on Friday and business inventories data on Tuesday will offer more clues on whether the advance GDP growth estimate will be revised later this month.

Kraft Foods closed lower in after-hours trading after the company reported fourth-quarter results. The stock, a Dow component, was off 1.3 percent to $30.72.

Disappointing earnings overseas hurt sentiment as Credit Suisse missed earnings expectations. The bank's shares fell 7.2 percent to $43.27, while Deutsche Bank ended the day down 2.6 percent to close at $62.61. PepsiCo cut its full-year earnings growth target, sending its shares down 1.6 percent to close at $63.36.

Unemployment Insurance Claims Down Sharply

New applications for unemployment insurance fell to a 2-1/2-year low last week, pointing to a stronger footing for the labor market as the economic recovery gathers momentum. The decline in claims partially reflected the unwinding of a weather-related spike in late January.

Initial claims fell by 36,000 claims to a seasonally adjusted 383,000, the lowest since early July 2008, the Labor Department said. The Labor Department indicated that claims were still unwinding some of the weather effects that pushed up filings late last month.

Offering more anecdotal evidence of a pick-up in hiring, consulting firm Deloitte will add about 18,000 jobs by May, just over two-thirds of which will be in the United States, returning to pre-crisis hiring levels. However, given the magnitude of job losses during the recession, the unemployment rate will remain high. Federal Reserve Chairman Ben Bernanke told lawmakers on Wednesday it could take about four years to get the jobless rate down to its "normal" range between 5 percent and 6 percent.

Underscoring the firming labor market tone, the four-week moving average of unemployment claims -- a better measure of underlying trends - dropped 16,000 to 415,500 last week. The number of people still receiving benefits under regular state programs after an initial week of aid declined 47,000 to 3.89 million in the week ended January 29. Economists had expected so-called continuing claims to fall to 3.90 million.

Crude Prices Recover...Somewhat

Brent crude recovered somewhat in late Thursday trading after Egypt's President Hosni Mubarak said he would transfer powers to his vice president, but would not step down. The news set off more worries that Egypt's unrest may spark similar turmoil in other Middle Eastern and north African countries and possibly disrupt oil shipments from the region.

The late retracements followed a volatile trading day in which investors struggled to digest the flow of geopolitical and fundamental issues. In London, Brent crude for March delivery retraced and traded down 30 cents at $101.52 a barrel having settled earlier at $100.87, down 95 cents.

U.S. crude for March delivery added to gains and was up 78 cents at $87.49, after settlement at $86.73, edging up 2 cents. The gains in U.S. crude helped narrow its discount to Brent by about $2, after it hit a record of $16.09 a barrel.

Earlier, domestic crude oil futures found support early from data showing jobless benefit claims fell to a 2-1/2-year low, a sign economic recovery was gathering momentum, before paring gains on the Mubarak news.

The market also weighed reports from the International Energy Agency and the Organization of the Petroleum Exporting Countries that the producer group last month raised oil output to the highest level since December 2008. However, both groups raised their demand forecasts.

U.S. gasoline and heating oil futures slumped more than 2 percent, falling back after sharp gains on Wednesday. arlier, oil prices rose on reports that the Saudi king may have died, but then Saudi officials said the king was in "excellent shape".