NEW YORK – The stock market lost its forward momentum Thursday as investors began to pare their stock holdings following a two-week surge. News of a retrenchment by FedEx Corp. also discouraged buyers.
FedEx, which investors see as a bellwether for the U.S. economy, said it would eliminate 1,700 jobs in an effort to fix its money-losing U.S. trucking business. FedEx also gave an earnings forecast that fell short of expectations.
The Dow Jones industrial average edged up 13 points in afternoon trading but the broader market was lower.
Another factor keeping buying on hold is the fact that the S&P 500 Index, the benchmark most used by professional investors, is approaching the high end of its recent trading range. Investors are often hesitant to push a major index outside of recently tested limits for fear that automated selling programs could kick in and send prices lower.
Over the past few days the S&P has approached 1,131, a level it has not touched since June. Market analysts have long paid attention to technical trading levels such as these, but they are especially important now since electronic trading is so prevalent.
«In a world where there’s no clear direction, technicals have more influence on trading,» said Brett Gallagher, deputy chief investment officer at Artio Global Investors.
The Dow rose 12.98, or 0.1 percent, to 10,585.71, in afternoon trading. The S&P 500 index fell 1.58, or 0.1 percent, to 1,123.49. The S&P is still up 7.1 percent in September, when its recent rally began.
The Nasdaq composite index fell 0.47, or 0.02 percent, to 2,300.85.
The decline came despite some encouraging news on the economy. The Labor Department said first-time claims for unemployment benefits fell to a two-month low last week to 450,000. They’re still well below levels that suggest economic growth.
«Bottom line, everybody is worried the economy is in terrible shape,» said Dennis Paul, a senior portfolio manager at the Rosenau/Paul Group at Hightower Advisors. «But it’s not getting any worse.»
A separate report Thursday indicated prices at the wholesale level rose more than expected last month, easing concerns about deflation, an economic malaise defined by falling prices. Relief over the reading in the Producer Price index sent Treasury prices slightly lower and their yields higher.
«I’m not sure the deflation theory is completely debunked, but it’s pretty close,» Jamie Cox, a managing director at Harris Financial Group.
The yield on the 10-year Treasury note, which moves opposite its price, rose to 2.76 percent from 2.72 percent late Wednesday. Its yield is used to help set interest rates on mortgages and other consumer loans.
About three stocks fell for every two that rose on the New York Stock Exchange where volume came to 570 million shares. Volume has been light throughout the recent rally, a further indication that not all traders are convinced about the strength of the market.
FedEx shares dropped $3.77, or 4.4 percent, to $82.17. Competitor UPS Inc.’s shares also fell following the report from Fed. UPS dropped $1.17 to $66.49.
Overseas markets also fell. Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index fell 0.2 percent, and France’s CAC-40 fell 0.5 percent.