Stocks were mixed Thursday as investors sought a direction for the market after a major selloff the day before. The Dow closed higher, while technology stocks fell for a third straight session.
Investors wrestled with how to view Wednesday’s 141-point drop in the Dow Jones industrial average — as a buying opportunity or a sign of a market correction — and how the Federal Reserve’s changing stance on interest rates would factor in.
“The market is on a precarious perch right now,” said Bryan Piskorowski, market commentator at Wachovia Securities. “Fundamentals are definitely robust, but there’s always the question of how robust they’ll be down the road. That’s the question people are making their bets on.”
The Dow climbed 41.92, or 0.4 percent, at 10,510.29 in heavy trading as many investors searched for bargains after the selloff.
Broader stock indicators were mixed. The Standard & Poor’s 500 index was up 5.63, or 0.5 percent, at 1,134.11, and the Nasdaq composite index finished down 9.14, or 0.4 percent, at 2,068.23. The Nasdaq has lost 85.60, or 4.0 percent, since Monday’s close.
Many on Wall Street hoped the Fed’s interest rate statement, and the selling it sparked, was an excuse to lock in profits rather than the beginning of a larger selling trend, especially given the economy’s overall health and the strength of recent earnings reports.
“The Fed has shown that they have no desire to make a pre-emptive rate increase,” said Jeff Swensen, senior trader at John Hancock Funds. “They want to see actual inflation before they raise rates, and that helped the market feel better about buying again.”
But the trading volatility that marks most earnings seasons persisted, despite nearly two-thirds of the S&P 500 firms beating analysts’ expectations.
“We definitely had a big sell-off yesterday that feels a bit overdone,” said Peter Dunay, chief market strategist at Wall Street Access. “It’s the craziness of expectations. We had very strong earnings, but that was already built into the market. If there is a pullback, it will temper expectations and let the economy, which is pretty strong, catch up to the expectations.”
New economic data from the government did not provide a clear picture of the pace and health of the recovery. First-time jobless claims for the week fell by 1,000 to the lowest level since the end of December. However, wages and benefits grew by only 0.7 percent, the lowest monthly rise in a year. Wall Street was looking ahead to Friday’s gross domestic product figures and next week’s January payroll data for a better read on the overall economy.
In the meantime, Exxon Mobil Corp. posted a record yearly profit in 2003 and beat analysts’ estimates for the fourth quarter by 10 cents per share. Shares jumped 66 cents to $41.47 on the news.
Eli Lilly & Co.’s earnings matched analysts’ expectations as the pharmaceutical giant posted a 1 percent growth in profits from a year ago. Lilly leaped $1.48 to $68.40.
Verizon Communications Inc., burdened with nearly $3 billion in one-time expenses due to voluntary job buyouts, nonetheless beat Wall Street expectations by 2 cents per share. The telecommunications giant was up 33 cents at $37.09.
Halliburton Co. climbed 82 cents to $30.23 after the company announced that it took a $1.1 billion charge related to asbestos lawsuits. The oilfield services firm managed to beat analysts’ estimates by 2 cents per share without the one-time expenses.
RealNetworks Inc. fell 30 cents to $6.14. The company was expected to report earnings after the close of the regular session. Wall Street expected a loss of 3 cents per share.
Declining issues outnumbered advancers by 3 to 2 on the New York Stock Exchange. Preliminary volume was 1.84 billion shares traded, compared with 1.64 million shares Wednesday.
The Russell 2000 index of smaller companies was down 4.05, or 0.7 percent, at 579.86.
Overseas, Japan’s Nikkei stock average fell 0.7 percent. Britain’s FTSE 100 and Germany’s DAX both closed down 1.3 percent, while France’s CAC-40 finished 1.2 percent lower.