Dow gives up gains after mixed reports
Wall Street declined in a choppy session as investors, flustered by mixed economic reports and more earnings warnings, shied away from commitments to stocks.
But the Dow Jones industrials fell just 37 points, ending their eight-day streak of triple-digit moves.
“This market is extremely skittish today. We’re swinging all over the place. I don’t really think people are sure whether to focus on earnings or the economy,” said Todd Clark, head of listed equity trading at Wells Fargo Securities.
The Dow gave up an early gain of 158 points to close down 37.80, or 0.5 percent, at 7,717.81, after dropping 183 points on Wednesday.
The broader market also finished lower. The Nasdaq composite index fell 20.98, or 1.8 percent, to 1,166.32. It was the tech-dominated index’s lowest close since September 12, 1996, when it closed at 1,165.81.
The Standard & Poor’s 500 index dropped 8.91, or 1.1 percent, to 819.00.
The Institute for Supply Management reported that its monthly non-manufacturing index rose in September to 53.9 from 50.9 in August. The figure, which beat analysts’ expectations, offered some hope that the economic recovery was gaining strength.
In another report, the Commerce Department reported U.S. factory orders were flat in August. The result was also better than the decline that analysts had forecast.
But the Labour Department reported that new jobless claims rose by a seasonally adjusted 5,000 to 417,000 for the week ending September 28. The increase was slightly larger than analysts forecast and followed a drop of 18,000 in the prior week.
The Dow registered its highest gains following the release of the services sector and the factory orders reports before giving them up later.
“Taken together, the reports show that profits are expanding. But we’re still forecasting that this will be the softest profits recovery from the deepest recession since World War Two,” said Charles Reinhard, senior US investment strategist at Lehman Brothers.
Charles Blood, senior financial markets analyst at Brown Brothers Harriman & Co, said the services sector report appeared to offer the best news of the day, because ”it sort of lays to rest, momentarily at least, that the economy isn’t tripping into a serious decline.”
Still, “it’s not strong enough in the whole flow of reports to show that a real recovery is on the way,” he said.
Investors have been jittery in recent weeks amid continuing concerns about earnings and tensions with Iraq. Before today, the Dow had eight straight triple-digit moves, most of them downward, as investors alternated between heavy selling and some bargain-hunting.
“There’s nothing to really catalyse the bulls,” Blood said. “It’s become clear that the economy has really slowed, so people are now looking for signs of a reversal.
“But at least so far, the signs haven’t appeared yet.”
Declining issues outnumbered advancers about 4 to 3 on the New York Stock Exchange. Volume was moderate.
The Russell 2000 index, which tracks smaller company stocks, fell 3.37, or 0.9 percent, to 356.85.
