After failing to sustain an early upward move, stocks gave back ground over the course of the trading day on Thursday before ending the session nearly flat. The pullback by the markets came as traders shrugged off an upbeat jobs report.
The major averages eventually ended the session mixed. While the S&P 500 inched up 0.28 points or less than a tenth of a percent to 1,432.84, the Dow edged down 18.58 points or 0.1 percent to 13,326.39 and the Nasdaq dipped 2.40 points or 0.1 percent to 3,049.38.
The early strength on Wall Street was partly due to bargain hunting, with traders picked up stocks at reduced levels following recent weakness.
Adding to the buying interest was the release of a report from the Labor Department showing that initial jobless claims unexpectedly dropped to a four-year low last week.
The report said initial jobless claims tumbled to 339,000 in the week ended October 6th from the previous week's revised figure of 369,000. The drop surprised economists, who had expected jobless claims to edge up to 370,000 from the 367,000 originally reported for the previous month.
With the unexpected decrease, jobless claims fell to the lowest level since a matching number in the week ended February 16th, 2008.
The report initially helped to drive stocks higher, although buying interest waned over the course of the morning due in part to indications that the data was distorted by an irregular filing by a large state.
Peter Boockvar, managing director at Miller Tabak, said, "After talking to a contact listed on the Labor Department press release in this morning's jobless claims data, I was told the state not revealed subtracted 30,000 from the weekly initial jobless claims figure."
"This would take the 'adjusted' number to 369,000, about in line with the original expectations of 370,000," he added.
Lingering concerns about the global economic outlook also contributed to the pullback by the markets, with a report from the Commerce Department showing a notable drop in U.S. exports in August.
Among individual stocks, Sprint Nextel (S) held on to a standout gain after the Wall Street Journal reported that Japanese mobile carrier Softbank is in advanced talks to buy the company in a deal expected to exceed $12.8 billion. Shares of Sprint Nextel jumped 14.3 percent.
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Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close for the broader markets.
Nonetheless, considerable strength remained visible among steel stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Steel Index. AK Steel (AKS) and Mechel (MTL) turned in two of the sector's best performances.
Oil service stocks also held on to strong gains, benefiting from an increase by the price of crude oil, which rose $0.82 to $92.07 a barrel.
Natural gas, brokerage, and health insurance stocks also posted notable gains, while weakness was visible among housing and electronic storage stocks.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday following the negative lead from Wall Street. Japan's Nikkei 225 Index fell by 0.6 percent, while China's Shanghai Composite Index ended the day down by 0.8 percent.
Meanwhile, the major European markets regained some ground following recent weakness. While the U.K.'s FTSE 100 Index rose by 0.9 percent, the German DAX Index advanced by 1.1 percent and the French CAC 40 Index jumped by 1.4 percent.
In the bond market, treasuries once again turned higher over the course of the session after seeing early weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.6 basis points to 1.675 percent after reaching a high of 1.732 percent.
Trading on Friday could be impacted by reaction to quarterly results from financial giants JP Morgan Chase (JPM) and Wells Fargo (WFC), which are both due to release their third quarter results before the start of trading.
Investors are also likely to keep an eye on U.S. reports on producer price inflation and consumer sentiment as well as remarks by Richmond Federal Reserve President Jeffrey Lacker, who voted against the Fed's recent decision to authorize a new round of quantitative easing.(RTTNews)