Small Change for Stocks

Updated from 4:06 p.m. EDT

Stocks' recent surge slowed to a crawl Thursday, but the major averages still ended in the green amid another big fall in oil prices.

The Dow rose 2.50 points, or 0.02%, to 10,004.50, the S&P 500 gained 2.04 points, or 0.18%, to 1127.44, and the Nasdaq added 5.75 points, or 0.29%, to 1975, enough to top its three-month high touched Oct. 6.

All three indices spent part of the day showing losses. Meanwhile, the 10-year Treasury note rose 4/32 in price with the yield down to 4.06%, having fallen below 4% earlier this week. The dollar was lower against the yen and euro.

Volume was moderate on the New York Stock Exchange, where 1.6 billion shares changed hands. At the Nasdaq, 1.8 shares traded. Advancing shares were even with declining ones on both exchanges.

The move in the markets this afternoon is "all fuel-based," said Jay Suskind, head of institutional equity trading at Ryan Beck & Co. "If the sense is that oil will continue to break, it will be an overall aggregate move to the upside in the equity market."

"We had two big up days in a row, and so this morning the traders were ready for any excuse to take some of those profits from the last couple of days," said Ken Tower, chief market strategist at CyberTrader.

"You're seeing interest rates going up sharply and the stock market rising sharply, and that combination means there is money coming out of bonds and into stocks," said Tower. "There has been so much bearishness on the part of portfolio managers and so much cash piled up on the sidelines that we're going to see some money coming into the market."

Suskind also attributed the drop in bond prices to the latest selloff in crude. "As oil gets cheaper, the market feels that the economy will stay stronger; therefore, rates would tend to go higher rather than lower, and the bond market reacts to that."

Earlier this week, the yield on the 10-year note had fallen as low as 3.94%, only to creep back up to 4.10% Thursday morning.

Oil futures, whose 5% decline Wednesday helped send the Dow Jones Industrial Average up 114 points, closed sharply lower at the Nymex on concern that China's first rate hike in nine years would slow economic growth and thus its demand for oil. Crude for December delivery lost $1.54, or 3%, to $50.92 a barrel, a three-week low. Wednesday's decline followed Energy Department data that showed a 4 billion-barrel build in U.S. crude inventories, enough to coax out profit-takers after this year's 70% oil-price run-up.

On the economic front, the government said initial jobless claims for the week ended Oct. 23 rose to 350,000, up from 329,000 in the prior week. Analysts had expected 335,000 new claims.

Viacom(VIAB Quote) said third-quarter earnings from continuing operations rose 12% from a year ago to $723 million, or 42 cents a share, on a 4% revenue increase to $5.5 billion. The EPS line was a penny above estimates, while the sales figure wasn't comparable to a much higher Thomson First Call consensus. The company sees 8% revenue growth for all of 2004 and a 16% jump in earnings per share and authorized an $8 billion stock buyback. Shares of Viacom rose $1.02 cents to $36.00.

"Over the past two months, tech stocks have been the leadership group among big-cap stocks," said Tower. "And with yesterday's rally, we have proof that the Nasdaq continues to be the leading group."

Verizon's(VZ Quote) third-quarter earnings were flat at $1.8 billion, or 64 cents a share, while revenue rose 6.7% to $18.2 billion. The earnings line matched estimates while the revenue line was $200 million above forecasts. Verizon shares dropped 2 cents to $39.38.

Before the bell Thursday, health care provider Aetna (AET Quote) announced that a tax refund and higher membership levels helped boost third-quarter income by 40% year over year. On an adjusted basis, the company earned $289.5 million, or $1.75 a share, ahead of analysts' consensus estimate of $1.73. Shares rose $3.55, or 3.9%, to $95.30.