Seesawing stocks end lower
NEW YORK -- Stocks ended an erratic day with a modest loss Thursday as investors tried to reconcile another batch of conflicting economic signals.
The Dow Jones industrial average closed down 30 points after falling as much as 110 and rising 87 during the course of the day. The other big market indexes also closed slightly lower.
Yesterday's trading fit with the market's monthslong pattern. Investors are torn between upbeat earnings news from companies and reports that point to an uncertain recovery. That indecision was clear as stocks rose on strong earnings at Southwest Airlines Co., Exxon Mobil Corp. and other companies, then fell on disappointment over a slight drop in first-time claims for unemployment benefits.
Traders were uneasy before the first reading on gross domestic product for the April-June quarter, to be released today.
"This is a market that is trying to ascertain how deep the downturn is going to be, and it is a market that's future-looking," said Quincy Krosby, a market strategist with Prudential Financial.
"It's looking at numbers five to six months from now, trying to get a portrait of the economy and where earnings are going to be. Until it gets clarity on that, it's going to be a choppy market."
There was little to help traders get that clarity yesterday. The Labor Department said initial claims for unemployment benefits dropped by a modest 11,000 to 457,000 last week. That's slightly better than the 459,000 forecast by economists polled by Thomson Reuters, but investors were disappointed because the drop was so small.
"They saw it was more of the same," said Bryan Jordan, director of financial markets analysis at Nationwide Investments. "This is an unusually stagnant labor market."
The Dow fell 30.72, or 0.3 percent, to 10,467.16. Although the Dow has fallen 70 points during the past two days, it is up 7.1 percent for July with one trading day to go.
A big chunk of the July gain came in just four days that ended Tuesday, as the average rose 420 points in response to strong earnings. On Wednesday, however, the Federal Reserve's assessment of the economy region by region reaffirmed for investors the fact that the recovery has slowed. Stocks fell and they continued their slide amid yesterday's uncertainty.
The Standard & Poor's 500 index fell 4.60, or 0.4 percent, to 1,101.53. The Nasdaq composite index fell 12.87, or 0.6 percent,to 2,251.69.
Traders will look next to Friday's GDP report for a sense of how the recovery is doing. Economists surveyed by Thomson Reuters are forecasting that the GDP, the broadest measure of the economy, slowed in the second quarter to an annual rate of 2.5 percent as the government cut back on stimulus programs. That would be down from the first quarter's 2.7 percent.