The stock market looked to end 2009 on a down note as institutional investors made some last-minute adjustments to their portfolios.
News that weekly unemployment claims fell to the lowest level since July 2008 gave stocks an initial blip Thursday, but the market gave back the gains as the few traders on hand took some profits to close out their books. Many investors believe that the market, which has had its best year since 2003, has seen the best of its gains for a while. So those were still at their desks were moving money out of some stocks.
"Everyone is looking to put a ribbon on the year and wrap things up," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
The Labor Department said new claims for unemployment benefits fell by 22,000 to a seasonally adjusted 432,000 last week. Analysts had expected claims would rise. The number of workers continuing to seek unemployment benefits fell by 57,000 to 4.9 million. Analysts predicted an increase.
The improved jobs report weighed on demand for the safety of government debt in the bond markets, sending interest rates higher.
Trading is expected to remain quiet as investors await the arrival of 2010 to draw clues about the direction of the markets. Many investors are away for the holidays and trading volume has been light.
In midday trading, the Dow Jones industrial average fell 53.58, or 0.5 percent, to 10,494.93. The broader Standard & Poor’s 500 index slipped 3.29, or 0.3 percent, to 1,123.13, and the Nasdaq composite index fell 4.85, or 0.2 percent, to 2,286.43.
The Dow has moved in a range of fewer than 70 points for the past six days. The last time the index traded in such a tight range for as many days was November 1996.
The S&P 500 index is up 24.7 percent for the year, the strongest performance since 2003. The Dow is up nearly 20 percent for the year, while the technology-dominated Nasdaq composite index is up 45.3 percent.
Ablin said investors will be looking at corporate profits and jobs numbers to determine whether the market can hold its huge gains in 2010.
"I have a certain belief that the market can keep going, albeit at kind of a shallower pace, but that’s going to require some help from corporate America and the economy itself," he said.
Four stocks rose for every three that fell on the New York Stock Exchange, where volume came to a light 170.7 million shares.
Most bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.85 percent from 3.79 percent late Wednesday.
The dollar was mostly lower against other major currencies, while gold rose.
Light, sweet crude rose 64 cents to $79.92 per barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 0.70, or 0.1 percent, to 632.71.
Overseas, Britain’s FTSE 100 rose 0.3 percent, while France’s CAC-40 rose less than 0.1 percent. Markets in Germany and Japan were closed.
Copyright 2009 The Associated Press.