Stocks waver, a day after biggest rally in 2 years
NEW YORK — Stock indexes are edging lower in midday trading Thursday, a day after the market had its biggest gain in two and a half years. Bank stocks and energy companies fell the most.
The Dow Jones industrial average fell 40 points, or 0.3 percent, at 12,005 as of 12:10 p.m. JPMorgan Chase & Co., fell 2.6 percent, the most in the Dow, followed by Alcoa Inc., which dropped 2.5 percent.
The Dow soared 490 points Wednesday, its largest gain since March 2009, after central banks around the world slashed borrowing costs to shore up European banks and avert a deeper credit crisis.
The S&P 500 index fell 4 points, or 0.4 percent, to 1,242. The Nasdaq composite edged up 1 point to 2,621.
Another rise in applications for weekly unemployment benefits dampened the mood. The Labor Department said initial applications rose to 402,000 last week. The government’s monthly labor report comes out Friday. Economists forecast that the unemployment rate will remain at 9 percent.
Investors often turn cautious following giant leaps, said Sam Stovall, chief equity strategist at S&P Capital IQ. The Dow shot up 813 points in the first three days of the week as fears ebbed that Europe’s debt crisis would escalate into a global panic.
“It’s almost like rooting for a football team that won by a very big score,” Stovall said. The next day, people are likely wondering whether the big victory was a one-off event or the start of a lasting trend.
“Lately, it seems like nothing lasts that long,” Stovall said. News out of Europe has sent stocks swinging from large gains to deep losses. One week ago, the S&P 500 was down 7.9 percent for 2011. After the rally Wednesday, the index is within 20 points of breaking even for the year.
Daily moves in the S&P 500 index have been three times more volatile in the past 13 weeks compared with their long-term average, Stovall said. Since 2000, the S&P 500 index jumped up or down by 2 percent an average of 14 days every three months. Over the past 13 weeks, that’s happened 45 times.
Traders took little encouragement Thursday from a stronger manufacturing report. The Institute for Supply Management said that manufacturing grew last month at the fastest pace since June.
The euro moved higher against the dollar as investors became less fearful about Europe’s financial problems. Borrowing rates for France and Spain eased after both countries had successful auctions of new debt.
Macy’s Inc., Costco Wholesale Corp., Limited Brands Inc. and other retailers reported sales gains Thursday that surpassed Wall Street estimates. Costco gained 1.6 percent.
Kohl’s Corp. fell 7 percent after the department store chain reported that a key revenue measure dropped sharply in November and fell far below Wall Street forecasts. Sales at stores open at least a year fell 6.2 percent; analysts had been expecting an increase of 2 percent.
Barnes & Noble dropped 17 percent after the bookseller posted a third-quarter loss instead of the slight profit analysts had expected. Sales also fell below analysts’ estimates.
Finisar Corp. lost 9 percent after the maker of fiber-optics components reported revenue that was lower than analysts were expecting.