11:30AM Strong manufacturing data lifted stocks off earlier lows.
Wall Street rebounded after a report indicated expanded manufacturing activity in February against expectations for further contraction in the sector. The ISM''s purchasing managers’ index rose to 52.3%, up from 49.3% in January and above the forecast reading of 50%. The Dow was helped by gains for several major blue-chip stocks, including Boeing (BA: chart), Coca Cola (KO: chart) and Merck & Co. (MRK: chart).

Biotechnology stocks continued to post losses. Biotechnology and pharmaceutical stocks continued to post losses. Amgen (AMGN: chart) was a notable decliner, falling 3.3% on SEC probe. U.S. shares of AstraZeneca (AZN: chart) dropped 1.9% and Sanofi-Aventis shed 1.7%. Bristol-Myers Squibb (BMY: chart) was a bright spot, rising 1% after UBS upgraded the stock from neutral to buy, citing valuation and a possible takeover bid. Wyeth (WYE: chart) shares also gained nearly 1% after the drug maker said Q1 earnings will come above the analyst estimate. Shares of Hana Biosciences (HNAB: chart) jumped 2.8% on brokerage upgrade.

Among other stocks in focus, Constellation Brands (STZ: chart), alcoholic beverage producer, dropped 14.4% after the company forecast full-year 2008 earnings well below analyst estimates. Shares of Ciena (CIEN: chart) dropped 8% after the communications equipment company reported weaker-than-expected Q1 earnings and issued disappointing Q2 guidance. On the side of the gainers, Hyperion Solutions (HYSL: chart) soared 20% after Oracle (ORCL: chart) agreed to acquire the business software developer for $3.3 billion. The Dow Jones industrial average was down 38.13 points, or 0.30 percent, at 12,230.50. The Standard & Poor''s 500 Index was down 2.87 points, or 0.20 percent, at 1,403.95. The Nasdaq Composite Index was down 8.3 points, or 0.34 percent at 2,407.85.

The ISM’s index rose 52.3 in January.
Thursday morning, the Institute for Supply Management released its report on activity in the manufacturing sector in the month of February. The report showed that activity in the sector expanded after contracting in the previous month. The ISM said that its purchasing managers index rose to 52.3 in February from 49.3 in January, with a reading of 50 or above indicating growth in the sector. Economists had been expecting a more modest increase to a reading of 50.0. The reports showed an acceleration in the pace of new orders growth, with the new orders index rising to 54.9 in February from 50.3 in January. Additionally, production and employment expanded after contracting in the pervious month, as the production index rose to 54.1 in February from 49.6 in January while the employment index rose to 51.5 from 49.5 in the previous month. At the same time, the report also showed a faster pace of price growth, with the prices index rising to 59.0 in February from 53.0 in January.


11:30AM Wall Street resumed the steep downward move on inflation jitters.
U.S. stocks steeply dropped at opening, as losses in overseas markets and resumed inflation jitters amid the latest economic data led to another heavy sell-off. The Dow Jones industrials slipped 200 points in the opening minutes of trading, with 30 of its components in the negative. Economically sensitive stocks were leading losers in the blue-chip average. Alcoa (AA: chart) fell 3%, General Motors (GM: chart) slipped 2.8%, and Caterpillar (CAT: chart) lost 2.3%. In addition, rumors that a big lender was in distress contributed to the general downward move. Amid concerns over the health of the mortgage lending market, SunTrust Banks (STI: chart) cut its Q4 earnings outlook to $1.39 a share, from the previously reported $1.46 a share. Company’s shares lost 1.1%.

However, a stronger-than-expected ISM''s manufacturing index for February helped trim losses. The Institute for Supply Management''s manufacturing index rose to 52.3, up from 49.3 in January and above the forecast reading of 50. Meanwhile, individual stocks advanced, helping to limit the decline. Motorola (MOT: chart) rose 2.7% after news that investor Carl Icahn raised his stake in the company. Oracle Corp. (ORCL: chart) gained 3% after it agreed to buy Hyperion Solutions (HYSL: chart) in a deal worth $3.3 billion. Shares in Hyperion surged 20%.

The networking sector stood out as a notable decliner, with Adaptec (ADPT: chart) falling 3% and Emulex (ELX: chart) losing 2.7%. Biotechnology stocks also showed considerable weakness, with shares of Amgen (AMGN: chart) losing 3.4% on news that it received an informal SEC inquiry into a Danish study of the company''s Aranesp anemia drug. In the first hour of trading, the Dow Jones industrial average was down 156.94, or 1.28%, at 12,111.69. The Standard & Poor''s 500 index was down 20.38, or 1.45%, at 1,386.44, and the Nasdaq composite index was down 44.79, or 1.85%, at 2,371.36.

Initial jobless claims unexpectedly increased.
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended February 24. The report showed that jobless claims unexpectedly increased compared to the previous week. The report showed that jobless claims rose to 338,000 from the previous week''s revised figure of 331,000. Economists had been expecting jobless claims to fall to 325,000 compared to the 332,000 originally reported for the previous week. The Labor Department also said that the less volatile four-week moving average rose to 335,250 from the previous week''s revised average of 327,750. Additionally, the reports showed that continuing claims in the week ended February 17 rose to 2.640 million from the preceding week''s revised level of 2.506 million. The unexpected increase in weekly jobless claims may raise some concerns about the strength of the February employment data due to be released next Friday. Economists currently expect the report to show that the economy added 110,000 jobs in February.


9:30AM London dips in mid-afternoon trade Thursday on weak US opening.
The UK market was lower on Thursday. By mid-afternoon, the FTSE 100 fell 1.39% to 6,102.

Advancers

Reuters, the news and financial information firm, led the gainers, up 0.6% after reporting a 32% increase in annual pre-tax profit to 313 million pounds, topping market forecasts.

British American Tobacco was also higher 1.4% also as it reported a 10% rise in underlying earnings that prompted the second biggest cigarette maker in the world to increase the size of its share buyback programme and raise its dividend by 19%.

News of a 14% rise in operating profit to more than 9 billion pounds at Royal Bank of Scotland lifted shares 2.8%. J Sainsbury was 2% higher after Marks and Spencer confirmed it had been considering making a bid for the supermarket chain.

Decliners

Concerns that cooling Chinese demand for metals would damage earnings prospects soon returned to erase intraday gains in the metal sector. Antofagasta fell 2.4%, Xstrata lost 4.2% and Rio Tinto was 2.3% weaker. Other decliners included Amvescap, the fund manager highly exposed to US equities, which moved 3% lower.

Aviva, the life assurance group behind the Norwich Union brand, declined after its full-year results missed forecasts. After a strong run in advance of the figures, shares in the company fell 5.1%. PartyGaming is in the wars again as profits crashed by 57% in 2006 following the forced pull-out from the US market last year. The stock lost 7.5%.