Stocks struggle higher
Dow-component Alcoa posts a narrower-than-expected quarterly loss and initial claims come in below consensus, a good sign for the labor market.
NEW YORK (CNNMoney.com) -- Bank, tech and commodity shares rose Thursday, but the broad market wavered as Alcoa's narrower-than-expected quarterly loss failed to dispel concerns about the start of the quarterly reporting period.
The Dow Jones industrial average (INDU) gained 4 points or less than 0.1%. The S&P 500 (SPX) index rose 3 points, or 0.4%. The Nasdaq (COMP) rose 5 points, or 0.3%.
Stocks managed gains Thursday, but the trend has remained downward since mid-June as investors have stepped back after a 40% rally off the March 9 lows.
Bets that the economy is stabilizing have given way to concerns that the stock market has gotten ahead of any recovery. Wall Street will be listening to a variety of corporations over the next week as they report quarterly results and give their outlook on future profits and the state of the economy.
"I don't know that there's anything out there that's going to lead us upward, until we start seeing the impact of the stimulus," said Joe Arnold, president at Foundation Wealth Advisors.
He said that after the big rally, investors remain on the defensive, staying in cash and waiting for concrete evidence that the economy is starting to turn around.
Friday's reports include the May trade balance from the Commerce Department, June import and export prices from the Labor Department and the initial July consumer sentiment index from the University of Michigan.
Quarterly results: Dow component Alcoa (AA, Fortune 500) began the corporate reporting period late Wednesday. The aluminum producer said it lost 26 cents per share versus a profit of 66 cents a year ago as the global recession hurt pricing and demand. But the decline was narrower than the loss of 38 cents per share analysts expected, according to Thomson Reuters.
Alcoa shares were off 2% Thursday afternoon.
S&P 500 companies are expected to see profits decline by 36% from a year ago, according to the latest figures from Thomson Reuters.
In the first quarter, better-than-expected earnings were rewarded by investors. But this time, investors are expecting more, said James Moore, equity research at Morgan Joseph.
"Cost cutting and inventory reduction won't be enough this time," he said. "We're going to need to see a pickup in revenue."
Next week brings reports from financial firms JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and Citigroup (C, Fortune 500). Dow components Intel (INTC, Fortune 500) and General Electric (GE, Fortune 500) are on tap as well.
Economy: The number of Americans filing new claims for unemployment fell to 565,000 last week from a revised 617,000 the previous week. That was short of the 603,000 new claims economists expected, according to a Briefing.com survey.
But continuing claims, a measure of Americans receiving benefits for a week or more, rose to 6,883,000, a fresh record high.
May wholesale inventories fell 0.8% after falling a revised 1.3% last month. Economists thought inventories would fall 1%. It was the ninth straight month of declining inventories.
Retail: The economic slowdown continued to take its toll on consumer spending, with clothing retailers and luxury item merchants especially feeling the impact of the recession.
Among the notable decliners, Abercrombie & Fitch (ANF) said same-store sales fell 32% versus a year ago, topping forecasts for a drop of 26.6%. Same-store sales is a key retail sector indicator that measures sales at stores open a year or more.
Victoria's Secret owner Limited Brands (LTD, Fortune 500) said sales fell 12% versus forecasts for a drop of 7.9%.
Other movers: Merck (MRK, Fortune 500) and Portola Pharmaceuticals said they will develop and market an oral blood thinner used to prevent stroke in heart patients. Merck will pay Portola $50 million up front and potentially an additional $420 million down the line. Merck, a Dow component, fell 3.7%.
But a variety of other Dow stocks rose, including DuPont (DD, Fortune 500), IBM (IBM, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).
Market breadth was positive. On the New York Stock Exchange, winners beat losers three to two on volume of 1.01 billion shares. On the Nasdaq, advancers narrowly topped decliners on volume of 1.91 billion shares.
Bonds: Treasury prices fell, raising the yield on the benchmark 10-year note to 3.40% from 3.31% late Wednesday. Treasury prices and yields move in opposite directions.
Other markets: In global trade, Asian markets ended mixed, while European markets ended higher.
Energy prices gained after several down sessions. U.S. light crude oil for August delivery rose 27 cents to settle at $60.41.
In currency trading, the dollar fell against the euro and gained against the Japanese yen.
COMEX gold for August delivery rose $6.90 to settle at $916.20 an ounce.
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