Stocks closed mixed Thursday, ahead of a key report on December employment to be released Friday. Standard & Poor's MarketScope said choppy trading throughout the day partly reflected position adjustments common at the start of a year.
The Dow Jones industrial average rose 25.05 points, or 0.24%, to close at 10,622.88. The broader Standard & Poor's 500 index gained 4.15, or 0.35%, to close at 1,187.89. The Nasdaq composite index lost 1.24 points, or 0.06%, to close at 2,090.00.
Looking ahead to Friday's economic calendar, the closely watched nonfarm payroll figures will be reported before the market opens. Payrolls are expected to rise 175,000 in December, compared to a gain of 112,000 in November. The U.S. unemployment rate is expected to stay the same at 5.4%.
On Thursday, the U.S. Labor Dept. reported that jobless claims surged by 43,000 for the week ended Jan. 1 to 364,000, up from a revised 321,000 the previous week. The increase was higher than analysts expected, and, according to the Labor Dept., may reflect some seasonal distortions.
The International Council of Shopping Centers also reported that December same-store sales rose 2.7%. Action Economics said the results support the view that the 2004 holiday sales season will be at least on par with last year, and likely the best since 1999. One clear trend was strength in high-end retailers compared to low-end.
Oil prices rallied after falling in electronic trading Thursday morning, as non-government sources predicted cold weather in the eastern U.S. next week. February NYMEX crude oil settled up 5% higher at $45.40.
U.S. chain retailers reported same-store December sales Thursday. Among those sharing better-than-expected results was Wal-Mart (WMT), whose same-store sales were up 3%. On Monday the retailing giant said it expected the increase, which was higher than analyst's predictions. Shares in Wal-Mart closed lower by 1.4%.
J.C. Penney (JCP) reported that its December same-store sales fell 1.2%, beating estimates that predicted a sharper fall, and said that fourth-quarter earnings were likely to be at the high end of the company's guidance. Shares in J.C. Penney closed slightly higher.
Less upbeat results came from Pier 1 Imports (PIR), which said December same-store sales fell a larger-than-expected 8.8%. The home furnishing retailer cut its estimate for fourth-quarter earnings for a second time. Shares closed down 1.8%.
Accessory retailer Claire's Stores (CLE) also cut its fourth-quarter forecast, as it reported that December sales rose 5% compared to 6% a year earlier. According to Claire's, an expected late wave of shoppers never came. Claire's shares fell 2.6%.
In other corporate news, the New York Times reported that Alltel (AT), the U.S.'s sixth-largest wireless carrier, is in talks to buy the regional carrier, Western Wireless (WWCA), which operates in the Northwest. The deal, worth about $4 billion, could happen within the next week. Alltel's shares closed down 3.4%, while Western Wireless's shares ended the day 15% higher.
The airline industry remained under pressure Thursday as the Associated Press reported that American Airlines, the largest carrier in the U.S., has largely matched the aggressive cost-cutting moves Delta Air Lines (DAL) announced Wednesday. Following Delta's lead, the nation's largest carrier eliminated Saturday night stay requirements and sharply cutt last-minute fares. Shares in American's parent company, AMR Corp. (AMR) were trading 3% lower.
Meanwhile, Continental Airlines (CAL) announced Thursday that it must cut $500 million in wages and benefits by the end of February or it could be forced to cut its fleet and workforce. Shares in the company fell 7.6%.
Treasuries ended Thursday mixed. The yield on the benchmark 10-year note was slightly lower at 4.27%.
The dollar continued to strengthen against the euro, thanks to a European Commission report showing a weakening of confidence in the Eurozone economy from November to December, and expectation that the Federal Reserve would raise interest rates. The euro was trading at $1.3171.
European stock markets closed higher Thursday.
In London, the Financial Times-Stock Exchange 100 index gained 18.30 points, or 0.38%, to close at 4,824.30 in spite of a British report showing that December services PMI fell unexpectedly to a three-month low of 54.9 from 56.7 in November.
Germany's DAX index rose 42.70 points, or 1%, to close at 4,300.94, despite a report that Eurozone December economic confidence declined. Among the gainers were Deutsche Bank, which moved higher after the company bought back some of its stock, and Volkswagen, after the company reported meeting its 2004 profit target.
In Paris, the CAC 40 index gained 27.12 points, or 0.71%, to close at 3,856.48.
Asian markets closed mixed Thursday. Japan's Nikkei 225 index moved modestly higher on bargain-hunting, gaining 54.74 points, or 0.5%, to close at 11,492.26. Shipping and construction companies led the gains, while chip stocks fell.
Hong Kong's Hang Seng index fell 52.32 points, or 0.4%, to close at 13,712.04. Pressuring the market were concerns about fund outflows and the strengthening U.S. dollar.