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STOCKS DIP AFTER RECENT SURGE

Associated Press

NEW YORK - A surprise drop in unemployment claims couldn't fuel another day of gains for the stock market.

Stocks posted modest losses Thursday after a three-day advance. Traders found little in the weekly employment data or in a housing report to provide new encouragement about an economic recovery.

The stock market has risen in eight of the past 10 days and hopes for a recovery have propelled the Standard & Poor's 500 index up 57.5 percent from a 12-year low in early March. The pace of the gains has brought warnings from analysts that stocks have risen too quickly.

"This market has become kind of saturated with good news," said Jeff Kleintop, chief market strategist at LPL Financial.

The Labor Department said workers filing for jobless claims for the first time dipped to 545,000 last week from an upwardly revised 557,000 the previous week. Economists polled by Thomson Reuters were expecting claims to rise.

The Commerce Department said housing starts rose in August to their highest level in nine months amid a jump in apartment building.

Similarly, the Philadelphia Federal Reserve's index of regional manufacturing conditions rose for a second straight month to its highest level since June 2007. However, a drop in new orders from August worried some investors.

David Chalupnik, head of equities at First American Funds, still expects stocks will push higher but said a break is necessary. "Eventually the market does need to take a breather," he said.

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