With traders seemingly reluctant to make any significant moves ahead of tomorrow's closely watched monthly jobs report, stocks turned in a lackluster performance throughout the trading day on Thursday, eventually ending the day mixed.
The major averages closed on opposite sides of the unchanged line, with the Dow posting a modest loss. While the Dow edged down 11.05 points or 0.1 percent to 12,705.41, the Nasdaq rose 11.41 points or 0.4 percent to 2,859.68 and the S&P 500 inched up 1.45 points or 0.1 percent to 1,325.54.
Despite the mixed performance on the day, the tech-heavy Nasdaq extended a recent upward move, reaching its best closing level in almost seven months.
The choppy trading came as traders looked ahead to Friday's monthly employment report from the Labor Department. Economists expect employment to increase by about 150,000 jobs in January, while the unemployment rate is expected to remain unchanged at 8.5 percent.
As a result of the focus on the monthly report, traders largely shrugged off the Labor Department's weekly jobless claims report, which showed that claims fell by more than anticipated in the week ended January 28th.
The report showed that jobless claims dipped to 367,000 from the previous week's revised figure of 379,000. Economists had expected jobless claims to edge down to 370,000 from the 377,000 originally reported for the previous week.
A separate report from the Labor Department showed a slightly smaller than expected increase in labor productivity in the fourth quarter. At the same time, the report showed a bigger than expected increase in unit labor costs.
Traders were also presented with remarks from Federal Reserve Chairman Ben Bernanke, who told the House Budget Committee that the U.S. economy is on the mend but is not yet ready to stand on its own two feet without help from the Fed.
"Over the past two and a half years, the U.S. economy has been gradually recovering from the recent deep recession," Bernanke said in prepared testimony.
He added, "While conditions have certainly improved over this period, the pace of the recovery has been frustratingly slow, particularly from the perspective of the millions of workers who remain unemployed or underemployed."
Among individual stocks, shares of Qualcomm (QCOM) rose by 2 percent after the wireless chip maker reported better than expected first quarter results. The company also issued healthy second quarter and full year guidance.
Allstate (ALL) also turned in a strong performance after the insurance company reported fourth quarter operating income that exceeded estimates, as catastrophe losses declined.
On the other hand, chemical giant Dow Chemical (DOW) fell by 1.2 percent after reporting a fourth quarter loss compared to a year-ago profit. While the company reported a profit excluding charges, the figure came in below analyst estimates.
Sector News
While most of the major sectors showed relatively modest moves on the day, significant strength was visible among airline stocks. Extending a recent upward move, the NYSE Arca Airline Index rose by 2.1 percent to its best closing level in well over six months.
Brazilian airline Gol (GOL) helped to lead the sector higher, advancing by 6.3 percent, while United Continental (UAL) and SkyWest (SKYW) also posted strong gains.
Gold stocks also saw considerable strength, moving higher along with the price of the precious metal. With gold for April delivery climbing $9.80 to a two-month closing high of $1,759.30 an ounce, the NYSE Arca Gold Bugs Index advanced by 1.8 percent.
Biotechnology, oil service, and networking stocks also posted notable gains, although buying interest remained relatively subdued.
On the other hand, health insurance stocks came under pressure on the day, dragging the Morgan Stanley Healthcare Payor Index down by 1.1 percent. The loss by the index came after it ended the previous session at a record closing high.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Thursday, benefiting from the optimism seen on Wall Street overnight. Japan's Nikkei 225 Index advanced by 0.8 percent, while Hong Kong's Hang Seng Index surged up by 2 percent.
The major European markets also moved to the upside over the course of the trading day. While the U.K.'s FTSE 100 Index edged up by 0.1 percent, the French CAC 40 Index rose by 0.3 percent, and the German DAX Index climbed 0.6 percent.
In the bond market, treasuries moved modestly higher, as some traders looked for a safe haven ahead of tomorrow's jobs report. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slipped 2.1 basis points to 1.825 percent.
Looking Ahead
While reaction to the monthly jobs report is likely to drive trading on Friday, reports on factory orders and service sector activity are also due to be released on the day.
Traders may also keep an eye on the release of quarterly results from companies such as Clorox (CLX), Tyson Foods (TSN), and Weyerhaeuser (WY).
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