After 2 days of big gains, stocks turn mixed
NEW YORK -- The stock market on Thursday plodded rather than soared, flicking between small ups and downs after two days of triple-digit gains.
Big-name companies reported higher quarterly earnings, and the government reported that the jobless claims are falling and that the economy did better last year than first expected. But Washington's budget battle cast a pall over the market, with spending cuts set to automatically kick in Friday and no sign that the two political parties might work out their differences beforehand.
The Dow Jones industrial average darted between small gains and losses in early trading. At midmorning, it was down three to 14,072. That tamped down some of the buzz from the last two days about when it might top its record high. The Dow hit its highest point, 14,164.53, in October 2007, before the effects of the financial crisis had manifested themselves.
Also at midmorning, the Standard & Poor's 500 was up two at 1,518. The Nasdaq composite edged up five to 3,167.
The economic data, while enough to edge the market higher for parts of the morning, painted a picture of investors' low expectations more than one of robust growth.
The government said the U.S. economy grew at an annual rate of 0.1 percent in the last three months of 2012. That's hardly ideal, but it's better than the previous estimate. Originally, the government thought the economy had shrunk 0.1 percent in the period.
The number of Americans seeking unemployment aid also fell last week, which economists described as mildly encouraging.
"We still have work to do, still a lot of headwinds to face," said Steve Sachs, head of capital markets at ProShares in Bethesda, Md. "But long story short, we're in a better position now than we were three years ago."
The past two days have been good for the stock market. The Dow gained a combined 291 points after reports showed that Americans are more confident and are buying more homes. Investors were also relieved by Federal Reserve Chairman Ben Bernanke's avowal that the Fed will keep trying to prop up the economy with bond purchases and other programs, although that also does signify that the Fed thinks the economy is doing poorly.
In Washington, lawmakers were preparing for another fiscal cliff. Automatic government budget cuts are set to take effect Friday, slashing spending in the defense industry and elsewhere. The cuts are happening because Democrats and Republicans haven't been able to compromise over the budget, and Thursday gave no indication that they will do so any time soon. Congressional leaders weren't scheduled to meet with President Barack Obama on the matter until Friday, after the cuts have already kicked in.
The yield on the 10-year Treasury note edged down to 1.89 percent from 1.90 percent late Wednesday.
Among companies making big moves:
•Groupon, the coupons website, plunged 21 percent after reporting late Wednesday that its quarterly loss had expanded. The stock fell $1.26 to $4.72.
•J.C. Penney fell 19 percent. Investors were unnerved by the quarterly loss the department store reported late Wednesday, which was larger than they were expecting. The stock dropped $4.10 to $17.06.
•A number of retailers and restaurants reported results Thursday morning. Wendy's, Domino's and the clothing chain Chico's were all up after reporting higher profit and revenue.
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