Dow Posts Best First Quarter Since 1999

NEW YORK ( TheStreet) -- Stocks wrapped up their best first quarter in more than a decade with a mixed session on Thursday as investors avoided big bets ahead of a key jobs report.

Sentiment was also dampened by oil prices, which hit their highest levels since 2008.

The Dow Jones Industrial Average shed 31 points, or 0.2%, at 12,320. The S&P 500 slipped 2 points or 0.2%, at 1,326, and the Nasdaq Composite edged higher by 4 points, or 0.1% at 2,781.

Still, the Dow finished the calendar first quarter with a gain of 6.7%, the index's best performance to start a new year since 1999. The S&P rose 5.4% for the three-month period while the Nasdaq climbed 4.8%.

The steady rally to start 2011 came as March showed some volatility as the markets experienced a slight correction in the wake of the devastating earthquake and tsunami in Japan and discord in Libya but the pullback proved short lived.

Investors have chosen to focus on domestic economic indicators such as jobs and consumer spending for signs that the U.S. economy is resilient to global concerns. So far, those reports have been positive, although the future outlook is still challenging.

3M ( MMM), Coca-Cola ( KO) and McDonalds ( MCD) topped the Dow Thursday while Intel ( INTC), Home Depot ( HD) and American Express ( AXP) were the biggest laggards.

"There's a couple of different things going on," said Lawrence Creatura, portfolio manager at Federated Investors, accounting for the day's mostly flat session. "We have a significant data point coming out tomorrow in the March jobs report and we're in that moment of the calendar that is the pre-earnings lull before the storm. Most companies are in quiet periods and there isn't a lot of company-specific information. That'll change in a week or so."

As far as the upcoming earnings season is concerned, Creatura said expectations are for continued growth despite somewhat difficult comparisons with the same period a year ago. According to the latest Thomson Reuters data, analysts are currently projecting profits to increase 13.2% for the companies comprising the S&P 500 in the first quarter with the materials, energy, industrials and technology sectors leading the way.

"Despite some of the global and domestic negatives, business has been good," he said. "What's going to be most important in this round of earnings calls will be the forward-looking statements. Investors will be looking for guidance on how management teams will be handling increasing input costs."

In economic news, initial jobless claims fell by 6,000 to 388,000 in the week ended March 26. The market had expected the level to hold steady at 383,000 from the previous week's initially-reported level of 382,000, according to Briefing.com.

The news comes a day after Automated Data Processing said companies added 201,000 jobs in March, and a day ahead of the government's March employment report, which is expected to show job growth of 185,000, according to Briefing.com. The unemployment level is projected to remain at 8.9%. The Labor Department will release the report at 8:30 a.m. ET on Friday.

Manufacturing activity in the Chicago region didn't weaken by as much as economists had expected, according to the Chicago's Institute for Supply Management's purchasing managers index, which fell to 70.6 in March from 71.2 in February. The market had been expecting a reading of 69.5, according to Briefing.com.

The Commerce Department said February factory orders unexpectedly fell 0.1%, after January's jump of 3.3%, which was upwardly revised from an initially reported increase of 3.1%.

Irish banks could need up to $33.9 billion to stay viable, the country's central bank said Thursday after conducting stress tests. Yields on Irish and Portuguese bonds had climbed ahead of the report.

London's FTSE lost 0.7%, and the DAX in Frankfurt fell 0.2%. Japan's Nikkei gained 0.5% and Hong Kong's Hang Seng added 0.3%.

Market breadth was split with 57% of stocks on the New York Stock Exchange gaining ground and 40% declining. There were 455 million shares changing hands on the NYSE and 1.2 billion shares trading on the Nasdaq.

Berkshire Hathaway ( BRK.B) said David Sokol, who was rumored to be among the top candidates to succeed Warren Buffett, resigned, amid disclosures from Buffett that Sokol bought stock in a company recently acquired by Berkshire. The stock shed 2.1%.

Sokol is also the largest stakeholder of bank-holding company Middleburg Financial ( MBRG). Shares of Middleburg soared 9.3% to $16.45 after Sokol said that he would like to start a "mini-Berkshire", prompting speculation about Middleburg's role in those plans.

Shares of Tesla Motors ( TSLA) were jumped16.2% to $27.56 after Morgan Stanley upgraded the electric car company to overweight from equal weight and increased its price target to $70 on expectations for a shift away from internal combustion engines.

The Federal Reserve Bank of New York rejected insurer American International Group's ( AIG) $15.7 billion offer to buy a subprime mortgage portfolio the government purchased from the insurer in the early days of the financial crisis. AIG's stock slipped 2.3% at $35.23.

Shares of Dendreon ( DNDN) gained 5.3% to $37.41 after the U.S. Centers for Medicare and Medicaid Services said it's leaning toward backing coverage of the company's Provenge treatment for prostate cancer.

Microsoft ( MSFT) filed a formal complaint with European antitrust regulators regarding Google's ( GOOG) online search dominance in the region.

JDS Uniphase ( JDSU), Frontier Communications ( FTR), Joy Global ( JOYG) and First Solar ( FSLR) were the biggest gainers on the S&P 500.

In commodity markets, the May crude contract gained $2.45 to settle at $106.72 a barrel, a 30 month high. The June gold contract jumped $15 to settle at $1,439.90 an ounce, a record high. Gold prices are up 1.3% for the quarter. Silver prices closed 37 cents higher at $37.88 another 31-year record close. Silver popped 22% in the first quarter.

The benchmark 10-year Treasury fell 4/32, lifting the yield to 3.457%. The dollar weakened against a basket of currencies, with the dollar index down by 0.3%.

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--Written by Melinda Peer and Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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