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Dow wrestles with records
Blue-chip indicator sets intraday mark but faces uphill struggle for third straight record close; Nasdaq gains.

NEW YORK (CNNMoney.com) -- The Dow Jones industrial average struggled Thursday afternoon in a bid for a third straight record close, although the blue-chip indicator did touch a new intraday high, while the Nasdaq climbed and the broader market stabilized.

The Dow (down 3.61 to 11,847.00, Charts) lost a few points with around 2 hours left in the session, after touching a record trading high of 11,862.77 earlier in the session.

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The Dow ended Wednesday's session at a record close of 11,850.61. On Tuesday, the blue-chip barometer first knocked out its old record from January 2000.

The S&P 500 (up 0.98 to 1,351.20, Charts) index hovered near unchanged after ending the previous session at a 5-1/2 year high.

The tech-fueled Nasdaq composite (up 9.70 to 2,300.65, Charts) added 0.4 percent after rising more than 2 percent in the previous session.

Stocks struggled in the morning as higher oil prices and bond yields gave investors a reason to hesitate after the latest leg of the rally. But the recent positive momentum was strong enough to keep stocks from falling much, and by midday, the market had stabilized.

Despite the big run up, "I think there's room to the upside in the market, and I think barring bad numbers related to the jobs or the economy, we should be able to keep rising," said Ron Kiddoo, chief investment officer at Cozad Asset Management.

He said that after such an advance, stocks were vulnerable to profit taking, but that as long as the mood of investors remains upbeat, they are likely to use the dips as a buying opportunity.

The latest leg of the rally has been sparked by bets that the economy is slowing, but not heading for a recession, that inflation is under control and that the Federal Reserve can start cutting interest rates early next year.

In the short term, Kiddoo said, the biggest threat is Friday's monthly employment report. Should the September report come in too weak, that would raise worries about the speed of the economic slowdown. Should it come in too strong, that might spark concerns about wage inflation.

Investors seem to be of the mindset than the 25 percent drop in crude oil prices from the summer highs means inflation is now under control. A pair of Fed officials looked to temper such bets in speeches given over the last 24 hours.

Late Wednesday, Federal Reserve Vice Chairman Donald Kohn gave a speech in which he discussed upside risks to inflation. Such concerns were echoed Thursday afternoon by Philadelphia Fed President Charles Plosser - who is not a voting member of the Fed's policy setting board.

U.S. light crude oil for November delivery gained 79 cents to $60.18 a barrel on the New York Mercantile Exchange, after falling to an 8-month low Wednesday.

Oil had rallied even more in the morning on reports that OPEC is planning to cut production by about 1 million barrels per day. However, OPEC's acting president denied that such a decision had been made.

The run up in oil prices was good news for oil stocks such as Exxon Mobil (up $0.70 to $67.31, Charts). However, for the rest of the market, it was not so welcome, as it reminded investors that consumer spending could be vulnerable should oil prices make a sustained move back toward the summer highs.

What's moving?

Biotech and chipmakers were among the stocks lifting the Nasdaq.

Retailers were also in focus, with a number of chains reporting September sales at stores open a year or more, also known as same-store sales. Sales were generally very strong in the month. However, that had a mixed impact on the underlying stocks Thursday.

Starbucks (up $2.44 to $38.40, Charts) said late Wednesday that September same-store sales rose 6 percent, topping estimates. Shares jumped more than 6 percent Thursday in active Nasdaq trading.

Teen retailer American Eagle Outfitters (down $1.15 to $45.19, Charts) reported a stronger-than-expected 19 percent rise in September same-store sales and boosted its third-quarter earnings forecast. However, shares fell about 2.5 percent.

J.C. Penney (down $1.53 to $70.33, Charts) reported stronger September sales and boosted its third-quarter earnings outlook. Yet shares declined.

Wal-Mart Stores (down $0.90 to $48.65, Charts), the leading retailer, said Thursday that it is rolling out its discount generic drug program four months ahead of schedule.

However, Wal-Mart stock continued to slide, with investors focusing on the company's news Wednesday that September sales were lower than initially reported, due to what it said was a miscalculation.

Hewlett-Packard (down $0.46 to $37.56, Charts) shares slipped Thursday on news late Wednesday that the California attorney general brought felony charges against former CEO Patricia Dunn and others involved in the company's boardroom leak probe.

Wal-Mart and HP are both Dow stocks and weighed on that index. However, a few of the Dow's economically-sensitive stocks bounced and that gave the average some balance. Gainers included Alcoa (up $0.45 to $27.61, Charts), 3M (up $0.84 to $75.71, Charts) and Caterpillar (up $2.13 to $67.67, Charts).

Apple (down $0.21 to $75.17, Charts) said late Wednesday that an internal probe of its past stock-option practices showed errors and as a result, it will likely need to restate past results. The stock was modestly lower Thursday afternoon, after seesawing in the morning.

Market breadth was positive. On the New York Stock Exchange, winners beat losers 3 to 2 on volume of 1.08 billion shares. On the Nasdaq, advancers topped decliners by a similar margin on volume of 1.24 billion shares.

COMEX gold for December delivery rallied $9.50 to $576.20 an ounce, after slumping more than $22 Tuesday.

That gave a lift to gold stocks, with the Amex Gold Bugs (up $6.47 to $292.00, Charts) index rising 2.3 percent.

Treasury prices slipped, raising the yield on the 10-year note to 4.60 percent from 4.57 late Wednesday. Bond prices and yields move in opposite directions.


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