January rally interrupted as buyers pull back
A month-long rally on Wall Street appears to be sputtering as stocks slipped on Thursday in what investors called a possible warning of weakness ahead.
Weaker-than-expected home sales figures and a group of mixed earnings reports tempered the market's recent buying interest.
With the S&P 500 up nearly 5 percent for the year, analysts said the market was due for a pullback. Wall Street has advanced in recent weeks as U.S. data raised expectations the economic recovery was picking up steam.
This market is tired and overbought, and we're seeing the results of that today, said Larry McMillan, president of McMillan Analysis Corp.
After yet another knee-jerk rally on moderately positive economic news, the buyers are out of gas, McMillan said.
Stocks began higher, helped by the Federal Reserve's vow on Wednesday to keep interest rates near zero at least until the end of 2014, a support for buying of risky assets.
But gains were short-lived and the market turned lower in the morning. The Dow's losses were limited by Caterpillar Inc
Housing-related stocks led the reversal after sales of new single-family homes fell for the first time in four months in December. It followed Wednesday's soft pending home sales report and dented optimism that housing may have reached a bottom.
Toll Brothers Inc
Banks, which stand to benefit from a recovery in housing, also fell. The KBW Bank index <.BKX> dropped 2.2 percent. SunTrust Banks Inc
AT&T Inc
The Dow Jones industrial average <.DJI> was down 22.33 points, or 0.18 percent, at 12,734.63. The Standard & Poor's 500 Index <.SPX> was down 7.60 points, or 0.57 percent, at 1,318.45. The Nasdaq Composite Index <.IXIC> was down 13.03 points, or 0.46 percent, at 2,805.28.
Stocks also rose early after data showed orders for durable manufactured goods rose more than expected in December, while unemployment benefit claims last week rose only moderately.
3M Co
This is one of the busiest weeks of earnings season, with 117 S&P companies expected to report. According to Thomson Reuters data, 59 percent of the 152 companies in the S&P 500 that have reported earnings beat analysts' forecasts, down from the 70 percent beat rate in recent quarters at this stage.
Amgen Inc's
Micromet's shares jumped 32.1 percent to $10.94 and were the most heavily traded on Nasdaq.
About 7.9 billion shares exchanged hands on the New York Stock Exchange, NYSE Amex and Nasdaq on Thursday.
(Reporting By Angela Moon; additional reporting by Doris Frankel; Editing by Kenneth Barry)
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