Stocks fight back from losses

NEW YORK (CNNMoney.com) -- Stocks end little changed Thursday, erasing bigger losses after weaker than expected reports on the economy revived worries about growth.

The Dow Jones industrial average (INDU) lost a few points and broke its seven-day winning streak. The S&P 500 (SPX) index ended just above breakeven, and the Nasdaq (COMP) composite lost a few points.

Stocks tumbled through most of the session, but managed to cut losses near the close thanks to a late-session advance in financial and commodity shares.

After the close, Google (GOOG, Fortune 500) reported quarterly earnings that missed forecasts on revenue that beat estimates, sending shares lower in after-hours trading.

JPMorgan's profit report added to bets that quarterly earnings will hold up despite the slower growing economy. But that wasn't enough to distract investors from a spate of mixed-to-weaker economic reports, particularly in the aftermath of a big rally over the past week.

"We're coming off a strong rally over the last few days that was earnings driven," said Kim Caughey, senior equity analyst at Fort Pitt Capital Group. "Today we took a rest from looking at the earnings and took another look at the economy."

On Wednesday, the Federal Reserve lowered its forecast for GDP growth this year. On Thursday, a report showed that weekly jobless claims fell to a two-year low -- but continuing claims, a measure of long-term joblessness, rose. Weak reports on manufacturing in the New York and Philadelphia regions added to the jitters.

China also reported strong GDP growth of 10.3% in the second quarter. Still, that fell short of the 11.9% growth recorded in the first quarter.

On Thursday afternoon, the Senate approved the most far-reaching financial reform bill since the 1930s, which President Obama is expected to sign into law next week.

The legislation is designed to limit big banks, protect consumers and prevent the future reoccurrence of financial crises like the one that hit in 2008.

Results: Dow component JPMorgan Chase posted a second-quarter profit of $4.8 billion, or $1.09 per share, trouncing expectations. The bank's strength in the quarter was due partly to a decline in the number of consumers defaulting on loans. However, JPMorgan's shares slipped amid the broader market selloff.

"It's great to have earnings surprises but what we really need to see are companies issuing upbeat forecasts for the second half of the year," she said.

Earnings for the S&P 500 are expected to have risen 28% versus a year ago, according to the latest from earnings tracker Thomson Reuters.

Economy: The number of Americans filing new claims for unemployment last week fell to 429,000, the lowest level since August 2008. Economists surveyed by Briefing.com thought claims would drop to 450,000 from a revised 458,000 in the previous week.

However, the drop in weekly claims was largely a result of seasonal factors. Continuing claims, a measure of Americans who have been receiving benefits for a week or more, rose to 4,681,000 from 4,434,000 in the previous week. Economists surveyed by Briefing.com thought claims would fall to 4,400,000.

The NY Fed-Empire Manufacturing survey plunged to 5.08 in July from 19.57 in June, surprising economists who were expecting it to dip to 18.

The Philadelphia Fed index fell to 5.1 in July from 8.0 in June, surprising economists who thought that manufacturing activity would rise to 10.0.

The Producer Price Index (PPI), which measures wholesale inflation, fell 0.5% in June after falling 0.3% in May. Economists thought it would fall 0.1%. The so-called core PPI, which strips out volatile food and energy prices, rose 0.1%. Economists expected it to rise 0.1% after it rose 0.2% last month.

Industrial production rose 0.1% in June after rising 1.3% in May. Economists thought it would hold steady. Capacity utilization held steady at 74.1% in June, versus forecasts for a rise to 74.2%.

On Wednesday, the Federal Reserve lowered its forecast for GDP this year to a range of between 3% and 3.5% versus the previous forecast of a range of 3.2% to 3.7%.

BP: Shares of the beleaguered oil company rallied 7.5% after BP (BP) said that it has managed to temporarily stop the flow of oil into the Gulf of Mexico, nearly three months after the explosion that caused the leak.

Company news: Private-equity firm Carlyle Group is buying vitamin maker NBTY (NTY) in a $3.8 billion cash deal that values NBTY's shares at $55 per share, a 47% premium above the stock's closing price Wednesday. Shares gained 43%.

World markets: European markets fell, with Britain's FTSE 100 down 0.8%, Germany's DAX off 1% and France's CAC 40 down 1.4%.

Asian markets ended lower. Japan's Nikkei fell 0.1%, Hong Kong's Hang Seng lost 0.2% and the Shanghai Composite fell 1.6%.

Currencies: The euro gained versus the dollar, hitting a two-month high. The dollar fell versus the Japanese yen.

Commodities: U.S. light crude oil for August delivery rose 26 cents to $76.88 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery gained $1.20 to $1,209.50 an ounce.

Bonds: Treasury prices rose, lowering the yield on the 10-year note to 2.98% from 3.05% late Wednesday. Debt prices and yields move in opposite directions.

Market breadth: Breadth was negative. On the New York Stock Exchange, losers beat winners by a narrow margin on volume of 1.12 billion shares. On the Nasdaq, decliners beat advancers 2 to 1 on volume of 1.99 billion shares.

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