Stocks Waver as Economic Data Give Mixed Signals

Wednesday’s losses were triggered by reports that suggested that the nation’s economy is slowing. Economic news set the tone again on Thursday.

Before the market opened, the government said first-time applications for unemployment benefits fell to 422,000, a slight dip from the previous week, but still above what economists expected. Applications need to fall below 375,000 to signal that the economy is adding jobs.

The Dow rose 6 points, or 0.1 percent, to 12,295 in early trading. The Standard Poor’s 500 rose 1 point to 1,315. The Nasdaq composite gained 11 points, or 0.4 percent, to 2,780.

Retailers reported mixed sales results. Gap fell 2.3 percent after sales fell across all its brands. Target fell nearly 3 percent after missing expectations as sales traffic slowed during the second half of the month. Costco Wholesale was among the few retailers that did not lose ground. The warehouse retailer gained 0.1 percent after reporting higher revenue, helped in part by international sales.

Fears that the economy is stalling sent the Dow Jones industrial average down 280 points Wednesday, erasing more than a quarter of the stock market’s gains for the year. Treasury bond yields fell to their lowest level since December as traders put a higher value on safer investments.

Many investors are now focused on the government’s monthly employment report, which is scheduled to be released on Friday. Economists expect that the unemployment rate will remain unchanged at 8.9 percent.

In Europe, though, the Euro Stoxx 50 index, a barometer of euro zone blue chips, fell 0.7 percent, with financial shares leading all market sectors lower. The FTSE 100 index in London was down 0.7 percent, the CAC 40 in Paris fell 1.1 percent, and the DAX in Frankfurt fell 1 percent.

Market volume was reduced by market holidays in Sweden and Switzerland, among others, and many European investors were taking a four- or five-day weekend.

Asian shares fell almost across the board. The main Sydney market index, the S.P./ASX 200, fell 2.3 percent. In Hong Kong, the Hang Seng index fell 1.6 percent, and in Shanghai the composite index fell 1.4 percent.

The Nikkei 225 stock average fell 1.7 percent in Tokyo, where Prime Minister Naoto Kan won a no-confidence vote in Parliament. Though his victory was not a surprise, the vote highlighted the deep divisions within the Japanese political establishment that are hampering policy changes that analysts say are needed to revive the Japanese economy after the March 11 earthquake and tsunami.

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