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Stocks slip lower
in choppy trading
NEW YORK >> Stocks drifted lower in choppy trading yesterday as investors sifted through economic reports and corporate earnings, but Eastman Kodak surged on restructuring news.
Tech stocks lost momentum for a second day amid weakness in the telecommunications and chip sectors, while bargain-hunting investors snapped up shares of American Airlines parent AMR Corp. following several analyst upgrades.
At least some of the losses were due to profit taking, said Brian G. Belski, market strategist for Piper Jaffray & Co., but the emotions of earnings season make it difficult to predict trends.
"You are seeing some rotation (away from tech), but I don't think it's a sea change," Belski said. "One day doesn't make a trend. So my advice is, don't overreact."
The Dow Jones industrial average closed down 0.44, essentially flat, at 10,623.18, after shifting in and out of positive territory throughout the session.
The broader gauges also closed lower. The Nasdaq composite index closed down 23.44, or 1.1 percent, at 2,119.01, while the Standard & Poor's 500 index lost 3.68, or 0.3 percent, to 1,143.94. The Treasury's two-year note rose 2/32 to 100 1632, with its yield falling 3 basis points to 1.60 percent. The 10-year note gained 1432 to 102 1032, with its yield declining 6 basis points to 3.96 percent.
In economic news, the Labor Department said that the number of people filing claims for unemployment benefits was down for the second week in a row, beating analyst expectations.
Separately, the Conference Board's index of leading economic indicators rose 0.2 percent in December, matching analysts' forecasts. The index, considered a predictor of future economic activity, rose on relatively strong consumer spending and indications that the job market is improving.
Overall, profits for the fourth quarter are expected to be 20 percent higher than they were a year ago, but some analysts say the market may be headed for a pause once earnings season is over. After eight weeks of gains, there is growing concern that prices have gotten too high, said Hugh Johnson, chief investment officer at First Albany Corp.
"You have to have a lot of courage to buy stocks at the current levels," Johnson said. "There's still uncertainty about the pace of the recovery, and current prices already reflect the good earnings news and then some."
Dow component Eastman Kodak closed up $3.49, or 13 percent, at $30.95 after its earnings beat expectations and the company announced plans to cut up to 15,000 jobs. Kodak is shifting its focus from traditional film to the digital photography market.
The day's other big gainer, AMR Corp., closed up $2.30, or 16 percent, at $16.85, after its earnings, announced late Wednesday, beat expectations and several brokerage firms issued upgrades. AMR has struggled to improve its bottom line since teetering on the edge of bankruptcy last year.
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