US stocks momentum slows after recent surge

Wall Street’s momentum sagged today, leaving the major indexes mixed after investors’ enthusiasm over a six-year low in unemployment claims and strong corporate earnings waned in the face of longer-term economic worries.

With lingering questions remaining about the health of the US economy, interest rates, oil prices and geopolitics, investors took profits in late trading, focusing on the energy and technology sectors that led the most recent rallies.

“Most companies have already reported their earnings, and I think we’re getting to a quiet period where it can be tough to keep anything positive going,” said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. “There’s still a lot out there to deal with.”

While weekly first-time jobless claims rose slightly, Wall Street was encouraged after the Labour Department said the four-week moving average of claims, a strong indicator of the work market’s health, fell to its lowest level since April 2000.

Positive earnings reports from Best Buy and Aetna also cheered would-be buyers for much of the session.

The Dow Jones industrial average rose 24.73, or 0.23%, to 10,883.35 after gaining 108.86 points on Wednesday.

Broader stock indicators were lower, however. The Standard & Poor’s 500 index fell 1.87, or 0.15%, to 1,263.78, and the tech-focused Nasdaq composite index dropped 11.11, or 0.49%, to 2,255.87.

Bonds reversed direction from the previous session and climbed higher as the first auction of 30-year Treasury bonds since 2001 was generally well received. The yield on the benchmark 10-year Treasury note fell to 4.54% from 4.59% late on Wednesday. The dollar was mixed against most major currencies, while gold prices edged lower.

Crude prices edged higher after the Energy Department reported a drop in US energy stockpiles today. A barrel of light crude settled at 62.62 (€52.27), up 7 cents, on the New York Mercantile Exchange.

In earnings news, Best Buy surged 4.13 to 52.96 after the electronics retailer raised its forecast for fourth-quarter earnings beyond analysts’ current expectations. Insurer Aetna, which climbed 3.15 to 99.27, and hotel operator Marriott International, which jumped 1.53 to 67.64, posted strong earnings and also increased their 2006 full-year forecasts.

American International Group gained 74 cents to 67.12 after regulators said AIG will pay 1.64 billion to settle charges of bid-rigging and accounting fraud with the New York attorney general and the Securities and Exchange Commission.

Oracle climbed 12 cents to 12.69 after a report that the company planned to cut 1,000 jobs. The business database maker has been aggressive in cutting jobs after mergers in order to maintain profits.

Investment bank Morgan Stanley installed acting president Zoe Cruz and longtime executive Robert Scully as co-presidents under Chief Executive John Mack. Morgan Stanley slipped 9 cents to 61.18 after having posted gains for much of the day.

Dow industrial component General Motors rose 15 cents to 22.14 after it announced a sales incentive programme for its sport-utility vehicles.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume totalled 1.78bn shares, compared to 1.79bn traded on Wednesday.

The Russell 2000 index of smaller companies fell 3.00, or 0.42%, to 718.16.