NEW YORK (Reuters) - Stocks edged lower on Thursday as investors took to the sidelines ahead of expected upheaval from next week's elections and likely additional stimulus by the Federal Reserve.
Next week's events could signal shifts in both monetary policy and legislative direction, leading investors to be cautious and largely disregard Thursday's corporate earnings and economic reports.
"You've certainly got a lot of people now nervous that what happens when they talk will be disappointing, and they should be concerned, because I don't know what (Fed policymakers) are going to say that is going to save the world," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
A look at exchange-traded funds based on some broad market indexes and sectors showed premiums for November out-of-the-money puts outweighed equally spaced call contracts for most instruments. Overall U.S. put volume rose 21.3 percent on Wednesday, while the CBOE Volatility Index .VIX logged its fourth consecutive session of gains, up 1.8 percent.
Thursday's session also brought about a breakdown in the recent inverse correlation between stocks and the dollar, as stocks slipped and the dollar index .DXY shed 1.1 percent against a basket of currencies.
"That correlation hasn't broken in quite some time. That could be disturbing a few people," added Saluzzi.
The Dow Jones industrial average .DJI dropped 20.36 points, or 0.18 percent, to 11,105.92. The Standard & Poor's 500 Index .SPX shed 0.16 points, or 0.01 percent, to 1,182.29. The Nasdaq Composite Index .IXIC gained 0.93 points, or 0.04 percent, to 2,504.19.
3M slid 6 percent to $84.95 and pulled the Dow lower after the diversified manufacturer reported quarterly earnings that just beat expectations, but trimmed its outlook due to costs from recent acquisitions.
New claims for unemployment benefits fell unexpectedly in the latest week, and this more encouraging reading on the labor market, along with the weak dollar, gave stocks an early boost.
However, investors remained cautious about making big bets ahead of the outcome of the mid-term elections and the Fed's announcement. Fed policymakers are set to meet on Tuesday and Wednesday.
Anticipation of a Fed move has been a driver of recent market action as investors speculated over the size and time frame of further stimulus. Equity investors have bet that more easing will invigorate an economic recovery and lift asset prices.
Since the beginning of September, the S&P 500 is up 12 percent.
Most leading economists expected the Fed to buy between $80 billion and $100 billion in assets per month under a new program to bolster the struggling economy, a Reuters poll found.
(Additional reporting from Doris Frankel; Editing by Jeffrey Benkoe)
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HOUSTON (Reuters) - BP Plc and Halliburton Co, the contractor who cemented the blown-out Macondo well, ignored cement design flaws weeks before the disaster that sparked the worst U.S. offshore oil spill, a White House panel said on Thursday.
Both Halliburton and BP were aware of flaws in the cement slurry, similar to the one used to seal the well, as early as March 8, "but neither acted upon that data," according to the National Oil Spill Commission's chief counsel, Fred Bartlit.
Halliburton had run a series of tests that showed the material was unstable, the letter said.
Shares of Halliburton fell sharply after the report's release. The stock tumbled as much as 16 percent before recovering some losses. Halliburton shares were off 11 percent, or $3.33 at $31.09 in afternoon trade on the New York Stock Exchange.
The cost to insure Halliburton's debt also jumped on the news.
The industry has developed tests to identify faulty cement jobs in offshore wells, but "BP and/or Transocean personnel misinterpreted or chose not to conduct such tests at the Macondo well," Bartlit wrote.
Tests conducted by industry cement experts show that "the foam cement used at Macondo was unstable," Bartlit wrote in a letter to co-chairs Bob Graham and Bill Reilly. "Halliburton (and perhaps BP) should have considered redesigning the foam slurry before pumping it at the Macondo well."
In an e-mailed statement, Halliburton said it is reviewing the report and will publish a response later on Thursday. A BP spokesman had no immediate reaction.
The report supports long-standing claims by BP that it shares the responsibility for the April 20 incident with its Macondo partners, including Swiss-based Transocean Ltd, which owned the doomed Deepwater Horizon rig.
BP's Macondo well ruptured on April 20, killing 11 rig workers and causing more than 4 million barrels of oil to spew into the sea.
The spill marred the coasts of four U.S. Gulf states, prompted a ban on new deepwater drilling and left BP's image in tatters in the United States, home to 40 percent of the London-based oil giant's business.
Nationwide's Chief Economist Martin Gahbauer on the housing market
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House prices dropped in October compared with the previous month as the property market saw an autumn fall, according to the Nationwide.
The building society said that prices were down 0.7% compared with September, with the average home now costing �164,381.
The more reliable three-month on three-month comparison showed prices fell by 1.5% in October.
The average home still costs 1.4% more than it did a year ago.
However, this was closer to parity than in September, when the difference was 3.1%.
"If the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0% and -1% by the end of 2010," said Nationwide's chief economist Martin Gahbauer.
First-time buyers
The drop in prices would generally be good news for those trying to get on the property ladder.
But first-time buyers still face the demand for high deposits from lenders, who are keen not to hand out mortgages to those who may be at higher risk of defaulting.
A separate report by the Home Builders Federation claimed that the average first-time buyer would need to save all their earnings for more than two years to get on the property ladder.
The group said a typical first-time buyer needed to save a deposit of just over �37,000 to buy an average priced starter home of �155,000.
The average age of a first-time buyer, unassisted by their parents or other family, was 37 years old, the report said.
"First-time buyers - the life-blood of the housing market - are almost entirely shut out," said Stewart Baseley, executive chairman of the federation.
"We desperately need an increase in lending and a properly functioning and sustainable mortgage market."
Regional figures
Figures from the Land Registry - which is considered the most comprehensive survey but which lags behind other polls - suggested that the picture is different across various regions of England and Wales.
It said that prices fell by 0.2% in September from August, with the average home worth �166,769. This was the first negative figure for six months.
The average home was worth 5.2% more than a year earlier, it said. However, the annual change ranged from a 0.2% rise in the north-east of England to an 8.8% rise in London.
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We urge the NUJ to reconsider its position in relation to the joint union result"
End QuoteBBC email to staff
Under the BBC's new offer, the amount employees would have to pay into the pension scheme has been reduced from 7% to 6%.
In return, they would get a career-average benefit pension - based on the average salary over an employee's entire career - that would be revalued by up to 4% each year. The previous offer was 2.5%.
When employees draw their pension, payments will increase automatically each year in line with inflation, by up to 4% - again up from a previous offer of 2.5%.
The NUJ said its members will walk out on 5 and 6 November and again on 15 and 16 November.
General Secretary Jeremy Dear said: "This massive vote against the BBC's latest proposal comes as no surprise, given the fundamental pay more, work longer, get less nature of the offer.
"NUJ members across the BBC have consistently dubbed the proposals a 'pensions robbery'. That hasn't changed. The BBC have now left members with no choice but to take action to defend their pensions."
The NUJ's 4,000 members at the BBC will also refuse to take on additional duties or volunteer for acting-up duties as part of an indefinite work to rule.
Bectu said their position could be reviewed if the pension deficit turns out to be less than �1.5bn.
In an email to staff, the BBC said it was "pleased" Bectu members had accepted the offer.
It added: "We urge the NUJ to reconsider its position in relation to the joint union result."
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Have you been affected by falling house prices? Are you a first-time buyer pleased by this news? You can send us your views and experiences using the form below.