Stocks were mostly lower Thursday, daunted by reminders that Europe has not solved its debt crisis and the U.S. economy is far from healed, despite progress on both fronts.
The Dow Jones industrial average rose 20 points to 13,146. It rallied in the final minutes of trading after being down as much as 93 points at its low point.
The broader Standard & Poor’s 500 and the Nasdaq composite index were both down. The S&P 500 fell 2 points to 1,403. The Nasdaq fell 10 points to 3,095.
Declining stocks led advancers by about 3-to-2. Volume was lighter than average at 3.8 billion shares.
On the economic front, the number of people seeking U.S. unemployment benefits dropped last week, another sign that the domestic job market is growing stronger, the Labor Department said Thursday.
Weekly unemployment benefit applications fell 5,000 to a seasonally adjusted 359,000. That’s the smallest number of applicants since April 2008. The four-week average, a less volatile measure, declined to 365,000.
When unemployment benefit applications drop consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate. The unemployment rate is now hovering around 8.3%, the lowest it has been in three years.
The government also confirmed, in its third and final estimate, that the U.S. economy grew 3% in final quarter of 2011. However, economists expect growth likely slowed in the current quarter to an annual rate of 1.5% as businesses held back on restocking their shelves.
Improvements in the U.S. economy have been driving this year’s market’s rally. Now, “investors are pausing to examine whether the growth is real,” said Lawrence Creatura, a Rochester, N.Y., portfolio manager at Federated Investors.
Investors also may be waiting to see companies’ earnings for the first quarter of 2012. Earnings season traditionally kicks off with Alcoa, which reports April 10.
“We’re in that odd period of silence,” Creatura said. “It’s like a bad Western movie where one guy turns to the other and says, ‘It’s quiet out here,’ and the other says, ‘Yeah, too quiet.’ That’s what today feels like.”
The yield on the 10-year Treasury note fell to 2% from 2.21%. The yield often drops when more people put their money into the perceived safety of bonds, which can be a sign they are pessimistic about prospects for stocks and the economy.
European markets fell across the board, despite a report from Germany that its unemployment rate fell slightly over the month. Britain’s FTSE 100 fell 1.2% to 5,742 and Germany’s DAX lost 1.8% to 6,875. France’s CAC-40 slipped 1.4% to 3,381. The euro fell 0.12% to $1.3301.
Though Greece is no longer on the brink of default, deep problems remain for the continent, where stronger countries are arguing that they shouldn’t have to bail out weaker ones.
The price of oil fell $2.14 per barrel in New York to $103.27, but that’s small relief for Americans who are paying an average of $3.92 per gallon. Investors worry that the high prices could stunt the economy’s plodding recovery.
France’s prime minister said there’s a “good chance” the U.S. and Europe will release oil reserves, which could drive down prices by adding supply. President Obama was expected later Thursday to call on Congress to end tax breaks for oil companies. The price of oil has doubled since October, and the price of gasoline has risen about 20% this year.
Meantime, in Europe, thousands of protesters flooded the streets of Madrid on Thursday and there were clashes with police a day before massive spending cuts and tax hikes are expected to be revealed.
A national strike began in Spain just after midnight. Unions are challenging a conservative government not yet 100 days old. They are protesting changes to labor market rules long regarded as among Europe’s most rigid.
Spain’s unemployment is nearly 23%, the highest among the 17 countries that use the euro.
Investors in the U.S. and in Europe are also looking at events in Asia, where there are signs of a slowdown in China, a nation that weathered the global financial crises perhaps better than any other.
Weak global consumption and the rising costs for labor, energy and commodities are finally starting to drag on the Chinese economy.
Source: The Associated Press