Stocks Drift Lower, Paring January Gains
January's rally started to slow Wednesday after a report showed that the economy unexpectedly contracted in the fourth quarter of last year.
Stocks have gained against a backdrop of low borrowing costs and a slow, but steady, economic recovery. However, the market may struggle to build on those gains in the immediate future as traders and investors turn their attention back to Washington, said Ernie Cecilia, chief investment officer at Bryn Mawr Trust.
The budget deal struck at the start of the year dealt with taxes, but across-the-board spending cuts were pushed back from Jan. 1 to March 1. While a showdown over the nation's borrowing limits appears to have been put off, lawmakers have yet to agree on how best to reduce government spending. Those negotiations could be protracted and increase stock market volatility, said Cecilia.
More government reports Thursday also gave investors a better picture of the health of the economy.The number of Americans seeking unemployment aid rose sharply last week but remained at a level consistent with moderate hiring. Investors will look for further clues about the strength of the jobs market Friday, when the closely followed monthly nonfarm payrolls report is published. The yield on the 10-year Treasury note, which moves inversely to its price, was little changed at 1.99 percent. Among other stocks making big moves: â¿¿ Under Armour gained $2.74, or 5.7 percent, to $50.87, after the company said its fourth-quarter earnings jumped 10 percent and the clothing company predicted revenue growth of at least 20 percent in each of the next two years. â¿¿ CononcoPhillips fell $3.09, or 5.1 percent, to $58 after the oil company said earnings fell as prices for oil and natural gas declined. The Houston-based company also said 2013 production would decline. â¿¿ JDS Uniphase added $2.11, or 17 percent, to $14.51 after the technology company reported stronger-than-expected earnings on improved revenue and margins late Wednesday.
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