Resisting expectations of a correction, Wall Street stocks traded higher for most of Thursday, with the Dow Jones industrial average within striking distance of a record high, but at the end of the session the major indexes retreated into slightly negative territory.
Investors found reasons to keep pushing markets higher following a sharp two-day rally, despite a read on economic growth that was weaker than expected.
But at the close, the Dow Jones industrial average was down 0.2 percent, the Standard Poor’s 500-stock index fell 0.1 percent and the Nasdaq composite index lost 0.1 percent.
Earlier, the Dow had risen 0.5 percent, taking it about 16 points shy of its October 2007 closing high.
The Commerce Department said Thursday that the economy grew 0.1 percent in the fourth quarter, a weaker pace than expected, although a slightly better performance in trade led the government to scratch an earlier estimate of a contraction in gross domestic product.
Separately, the number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting the labor market recovery was gaining some traction.
“The G.D.P. revision is positive but nothing to write home about, especially since it missed estimates,” said Adam Sarhan, chief executive of Sarhan Capital in New York.
While markets suffered steep losses earlier in the week on concerns over European debt, they have since recovered, with the gains fueled by strong data and comments from Federal Reserve chairman, Ben S. Bernanke, that showed continued support for the Fed’s economic stimulus policy.
“Bulls are still leading the market with the pullback bought up quickly, but we’re in a wait-and-see period after the big move we’ve had,” Mr. Sarhan said.
So far in February, the S.P. 500 has gained 1.2 percent, the Dow is up 1.6 percent and the Nasdaq has added 0.6 percent.
Investors will also be keeping an eye on the debate in Washington over government budget cuts that will take effect starting Friday if lawmakers fail to reach an agreement on spending and taxes. President Obama and Republican Congressional leaders arranged to hold last-ditch talks to prevent the cuts, but expectations were low that any deal would be produced.
“Investors have come to the realization that sequestration isn’t the end of the world and that it will eventually be fixed,” said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, N.Y. “But going into March, the risk is that the economy slows down and disappoints investors.”
J.C. Penney shares slumped 20.9 percent after the department store reported a steep drop in sales on Wednesday. Groupon also slumped on weak revenue, with the stock off 24 percent.
Sears Holdings started the day higher, after its earnings and sales beat expectations, but then fell 3 percent.
European shares ended modestly higher, while Asian markets closed sharply ahead.
Article source: http://www.nytimes.com/2013/03/01/business/daily-stock-market-activity.html?partner=rss&emc=rss
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