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Stocks Barely Budge on Mixed Outlook for Global Economy


NEW YORK ( TheStreet) -- Major U.S. stock indices were little changed Thursday after a mixed bag of economic reports failed to show the direction of the global economy.

The Dow Jones Industrial Average fell 10 points, or 0.1%, at 13,165.

There was a roughly equal number of decliners and advancers among the Dow's 30 components. American Express (AXP), Walt Disney (DIS), United Technologies (UTX) and AT&T (T) were the biggest percentage decliners. Cisco (CSCO), Caterpillar (CAT) and Alcoa (AA) led the gainers.

The S&P 500 finished up about half a point at 1,403, but still not far off its four-year high of about 1422.

"The market continues to confound all of those that are looking at what appeared to be weak -- and in some cases -- deteriorating economic fundamentals globally," Janet Engels, an analyst at RBC Wealth Management commented.

The Nasdaq climbed 7 points, up 0.25% to 3018.

Basic materials, capital goods, energy and technology led the market gains. The weaker sectors were conglomerates, transportation, health care and consumer staples.

Volume totaled 70.3 million shares on the Big Board and 1.67 billion on the Nasdaq.

Matthew Zeman, a trader at Kingsview Financial, attributed the relatively dull market action to the summer doldrums -- people being on vacation and also waiting to see if there's any Fed action at next month's meeting.

"Given the big bounce we had recently, the fact we didn't sell off yesterday or much today bodes well that the bulls continue to have the momentum," said Ryan Detrick, senior technical strategist at Schaeffer's. "It's still our view that, overall, the economy will grow more than most think in the second half of this year, with housing being one of the key factors. Better housing data has a much bigger impact on overall consumer confidence than anything the Fed can do."

The Labor Department reported Thursday that initial jobless claims during the week ended Aug. 4 fell 6,000 to 361,000 from the previous week's upwardly revised figure of 367,000, which was welcome news. However, the four-week moving average was 368,250, an increase of 2,250 from the previous week's average of 366,000. Economists surveyed by Reuters expected claims of 370,000.

Also, continuing claims for the week ended July 28, were 3.332 million, an increase of 53,000 from the preceding week's level of 3.279 million.

"A significant number of CEOs are not inclined to continue hiring and investing if they are uncertain as to how much of the health care burden they will shoulder for those newly hired employees and how much more in taxes they will be paying," said Alan Zafran, a partner at Luminous Capital. "They'd rather 'wait and see' before taking action."

On the better-than-expected weekly jobless claims numbers, Doug Roberts, chief investment strategist for Channel Capital Research, cautioned that it's not clear yet how much of the improvement is seasonally related and whether less palatable data could re-emerge by the time the summer is over.

"One number doesn't make a rebound," he said.

The Commerce Department reported Thursday that the June trade deficit narrowed to $42.9 billion from a downwardly revised $48 billion in May. Economists, on average, predicted the deficit shrank to $47.5 billion from $48.7 billion.

The Commerce Department also said Thursday that wholesale inventories fell 0.2% in June -- the steepest decline since September after no change in May, following a downward revision. This, as distributors experienced the sharpest decline in sales in three years. Economists on average thought that inventories rose 0.3%.

September crude oil futures fell 32 cents to settle at $93.35 a barrel and December gold futures settled up $4.20 at $1,620.20 an ounce.

The benchmark 10-year Treasury was falling 5/32, raising the yield to 1.697%. The greenback was up 0.34%, according to the dollar index.

The Hong Kong Hang Seng index finished higher by 1% after data showing that inflation eased further in China in July, providing the country with more leeway to reduce interest rates or increase spending amid a spate of weak July indicators.

Growth of industrial production in China fell to 9.2% in July from 9.5% in June, its lowest rate since May 2009, and retail sales growth slowed to 13.1% from 13.7%. Fixed asset investment also missed estimates.

In corporate news, shares of Wendy's (WEN) rose 0.9% after the company said sales at restaurants opened at least 15 months increased by 3.2% in the quarter, largely thanks to fresh menu items and remodeled restaurants. Wendy's reported a second-quarter loss due to debt refinancing.

Department-store operator Kohl's (KSS) posted a drop in second-quarter earnings of 20% amid a bigger-than-expected decline in same-store sales and softer margins. Shares shed 1.2%.

E*Trade Financial (ETFC - Get Report) shares popped 6.86% after the ouster of its CEO Steven Freiberg, which came as the stock trades near multi-year lows.

Monster Beverage (MNST - Get Report) shares tumbled 9.7% after a miss on both sales and earnings.

Several private-equity firms that have been approached to join in a buyout of Best Buy (BBY) are sitting on the fence, private-equity sources told Reuters, citing the lack of a tangible plan by the retailer's founder Richard Schulze. Shares closed down 3.37%.

"Earnings aren't great, and revenues have been less than spectacular, but have they truly disappointed? No, they really haven't truly disappointed in here," said RBC Wealth Management's Engels.


-- Written by Andrea Tse in New York.



>To contact the writer of this article, click here: Andrea Tse.

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