Mixed performance for US stocks

Wall Street struggled through an indecisive session today, finishing mixed as investors grappled with higher energy costs, the prospect of declining earnings growth and a slower US economy.

Oil prices were volatile throughout the session, and investors remained jittery about the possibility of economic growth curtailed by high fuel prices. A barrel of light crude settled at US$63.27 (€51.96), up 2 cents, on the New York Mercantile Exchange after falling well below US$63 (€51.74) per barrel during the day.

The Conference Board’s latest reading of its index of leading economic indicators, a forecast of future economic activity, was somewhat encouraging with its prediction of modest economic growth. The index posted a 0.1% increase in July, less than the 0.2% economists had estimated and a sharp drop from June’s 1.2% hike.

With mediocre economic data and little change in oil, the meandering trading session was unsurprising. However, the lack of a major selloff in recent days was cause for optimism, analysts said.

“The market is behaving like you’d expect it to,” said Jack Caffrey, equities strategist at JP Morgan Private Bank. “Certainly oil is going to be volatile, but earnings remain strong and the economic data is OK. I think we can expect a reasonable reacceleration of the market in the second half.”

The Dow Jones industrial average rose 4.22, or 0.04%, to close at 10,554.93.

Broader stock indicators were modestly lower. The Standard & Poor’s 500 index dropped 1.22, or 0.1%, to close at 1,219.02, and the Nasdaq composite index lost 9.07, or 0.42%, to 2,136.08.

Bond prices surged a day after inflation worries prompted a selloff. The yield on the 10-year Treasury note fell to 4.21% from 4.27% late on Wednesday. The dollar rose against most major currencies, while gold prices fell.

The latest report on unemployment was disappointing for stock investors. According to the Labour Department, the number of people making first-time unemployment claims rose to 316,000 last week, up from 310,000 the previous week and higher than economists expected.

Yet despite still-high crude oil prices and their growing impact on consumer spending, many analysts remain bullish, and were cheered by the market’s relatively minor losses of late, noting that they came on light volume.

“Pullbacks are healthy, and with it coming on light volume, it just tells you that, yeah, people are worried, but they’re not bailing out entirely,” said Bill Groenveld, head trader at vFinance Investments. “Yes, oil’s a worry, and that’s going to be a month-to-month thing to watch. But economic growth is there and earnings are there.”

Google pressured the technology sector after the company announced it would sell up to 4 billion in a secondary stock offering. The company said it would use the money for general purposes as well as potential acquisitions, though Google added that it had no particular takeover in mind. Google fell 5.11 to 279.99 on the news.

Limited Brands saw its second-quarter earnings decline, but still managed to beat Wall Street profit forecasts by 3 cents per share. Like other retailers, the operator of Victoria’s Secret, Bath & Body Works, Express, and Limited Stores issued a full-year earnings forecast that was lower than analysts had expected. Limited Brands dropped 1.17 to 22.11.

Home Depot added 8 cents to 40.70 after the Dow industrial declared a 10 cent cash dividend and authorised an additional US$1bn (€0.82bn) stock repurchase programme.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume totalled 1.4bn shares, compared with 1.42bn traded on Wednesday.

The Russell 2000 index of smaller companies fell 3.63, or 0.55%, to 651.19.