MarketView for September 20

Summary

The Dow Jones industrial average was the only one of the three main equity indexes to move higher on Thursday while the S&P 500 and the Nasdaq cut most of the day's losses in a sign that sentiment remains generally positive despite several weak manufacturing surveys.

Pockets of strength included housing, with an index of housing up 0.8 percent, following Wednesday's gains on better-than-expected housing market data. The S&P energy index rose 0.4 percent, in sync with a rally in Brent crude oil prices after a three-day slide. The S&P utilities index . gained 0.4 percent.

Several economic indicators painted a sobering picture of the global economy. Manufacturing closed out its weakest quarter in three years this month, and the number of Americans filing new claims for jobless benefits held near two-month highs last week. The U.S. data followed disappointing manufacturing reports from Europe and China.

In a bright spot for the market, Trulia ended the day up 41.2 percent to close at $24 in its market debut, as investors bet an improvement in the housing market would benefit the online real estate listing service. At its session high, Trulia's stock touched $25.20 resulting in a again of 48.2 percent from its initial public offering price of $17.

After the bell, shares of Oracle fell 0.53 percent to $32.09 after the company reported that quarterly hardware sales were down 24 percent from a year earlier as the technology giant continued its struggle to turn around the computer division it acquired with its purchase of Sun Microsystems. In regular trading, Oracle ended the day at $32.26, a decline of 1.6 percent.

The benchmark Standard & Poor's 500 Index has gained 5.9 percent since the beginning of August, driven higher mostly by expectations of more stimuli from central banks. A week ago, the Federal Reserve announced its third round of stimulus or quantitative easing, known as QE3, helping push stocks up last Friday within reach of five-year highs.

In a sign of bullishness, UBS raised its target level for the S&P 500 by the end of 2012 to 1,525 from 1,375 on Thursday, stating that the equity markets will climb after aggressive monetary easing by central banks.

Transportation stocks, sensitive to the nation's economic fortunes, ranked among the worst performers, a day after Norfolk Southern said its earnings would fall short of expectations. Norfolk shares ended the day down 9.1 percent to close at $66.11.

Boston Fed President Eric Rosengren said on Thursday that the Fed's actions last week "should result in stronger economic growth, and return us to full employment more quickly than would be the case, absent the policies."

Manufacturing in China contracted for an 11th straight month in September, according to a private-sector survey of factory managers; in the euro zone, a downturn in activity in the service sector steepened this month at the fastest pace since July 2009.

Retailers' shares also fell. Bed, Bath & Beyond was down 9.8 percent to end the day at $62.08 a day after the company posted quarterly results that narrowly missed Wall Street's estimates as the result of higher costs.

J.C. Penney fell 11.2 percent to $25.83 after Chief Executive Ron Johnson said new shops within stores are doing much better than other parts of its department stores, but it was "way too early to draw conclusions" as the retailer is still rolling out the strategy.

Facebook fell 3 percent to $22.59 after the company said it will start charging businesses to run promotional offers on its social network, turning a free service into a potential source of revenue.

About 6.15 billion shares changed hands on the three major equity exchanges, compared with the year-to-date average daily closing volume of 6.54 billion shares.

Leading Indicators Fall

According to the Conference Board, a gauge of future economic activity fell in August, thereby pointing to sluggish economic growth in the months ahead. The Board’s Leading Economic Index fell 0.1 percent to 95.7 after rising 0.5 percent in July. That was in line with consensus expectations and reflected weak manufacturing orders and consumers' perceptions of business conditions.

"The economy continues to be buffeted by strong headwinds domestically and internationally," said Ken Goldstein, an economist at the Conference Board. "As result, the pace of growth is unlikely to change much in the coming months. Weak domestic demand continues to be a major drag on the economy."