Major U.S. stock averages gave up gains after a lower-than-expected revision in fourth-quarter gross domestic product data disappointed.



NEW YORK (TheStreet) -- Major U.S. stock averages dived in the final hour of trading on Thursday, reversing day-long gains, as a lower-than-expected revision in fourth-quarter gross domestic product data offset better-than-anticipated Chicago business activity and jobless claims reports.

The markets have largely continued to shrug off sequestration deadline concerns, with the Dow still hovering near its all-time closing high of 14,164 as monetary stimulus reassurances offset the fiscal drag. The Dow peaked at 14,149.15 on Thursday.

The Dow Jones Industrial Average lost 20.88 points, or 0.15%, to 14,054.

Breadth was negative, with laggards outpacing gainers 19 to 11. Procter & Gamble(:PG), Wal-Mart(:WMT) and United Health(:UNH) were among the sharpest percentage blue-chip decliners.

Home Depot(:HD), Coca-Cola(:KO), Hewlett-Packard(:HPQ) and DuPont(:DD) were among the stocks that gained.

The S&P 500 closed off 1.31 point, or 0.09, at 1515. The Nasdaq dropped 2.07 points, or 0.07%, to 3160.

Sectors in the broader market were mixed, led higher by consumer cyclicals, and transportation. Basic materials and conglomerates were deepest in the red.

Volumes totaled 3.8 billion shares on the Big Board and 1.99 billion on the Nasdaq. Advancers edged decliners incrementally on the New York Stock Exchange, while losers slightly outpaced winners on the Nasdaq.

In U.S. economic news Thursday, the Chicago PMI ticked up to 56.8 in February from 55.6. Economists were expecting levels to fall to 54.

"Overall, this was a solid report -- consistent with the strong Empire State and Richmond Fed surveys, but in contrast to the headline decline in the Philly Fed survey -- and suggests upside risk on tomorrow's ISM manufacturing report," Jan Hatzius, chief U.S. economist at Goldman Sachs, wrote in a note.

The Labor Department said initial jobless claims in the week ended Feb. 23 were 344,000, a decrease of 22,000 from the previous week's upwardly revised 366,000. The four-week moving average was 355,000, a decline of 6,750 from the previous week's 361,750.

Continuing claims in the week ended Feb. 16 were 3.074 million, a fall of 91,000 from the preceding week's upwardly revised level of 3.165 million.

Economists, on average, predicted initial jobless claims of 360,000 and continuing claims of 3.15 million.

Cooper Howes, U.S. economist for Barclays, said that the initial jobless claims numbers were a "solid" improvement from the prior week and are the latest evidence that the labor markets are steadily improving.

However, the positive data was offset by a relatively disappointing GDP report. The Bureau of Economic Analysis' second estimate on fourth-quarter gross domestic product was an increase of 0.1% versus a decrease of 0.1% in the previous estimate. Economists were expecting a revised increase of 0.5%.

"While not negative any more, the weakness in fourth-quarter GDP still looks grossly exaggerated; other data, such as employment growth and the ISM indexes, suggest that the trend is at least 2%, perhaps better than that," Jim O'Sullivan, chief U.S. economist at High Frequency Economics, said in a note. "To some extent, the weakness in the fourth-quarter was pay back for what may have been exaggerated strength in the third quarter."

Overseas markets were mostly higher Thursday amid confidence that global central banks will continue to lend support to the economy. European Central Bank President Mario Draghi also said that he anticipates accommodative policies to continue.

The Nikkei Average in Japan finished ahead by 2.71% and the Hong Kong Hang Seng index finished up 1.96%. The FTSE 100 in London rose 0.55% and the DAX in Germany closed up 0.86%.

Gold for April delivery settled off $17.60 at $1,578.10 an ounce at the Comex division of the New York Mercantile Exchange, while April crude oil futures closed down 71 cents to $92.05 a barrel.



The benchmark 10-year Treasury was rising 4/32, diluting the yield to 1.889%. The dollar was rising 0.47%, according to the U.S. dollar index.

In corporate news, J.C. Penney's(:JCP) fourth-quarter loss widened from a year earlier as sales plunged almost 30%. Shares plunged 17%.

Groupon (:GRPN), the daily deals company, missed Wall Street's fourth-quarter earnings estimates. Shares plummeted 24.3%.

Sears(:SHLD) posted fourth-quarter earnings of $1.12 a share on revenue of $12.26 billion as Sears' domestic comparable-store sales improved 0.8%. Analysts, on average, were expecting earnings of 98 cents a share on revenue of $11.77 billion.

Earnings beat expectations, but were primarily the results of cost cutting programs. Shares slipped 5.2%.

Kohl's(:KSS) projected full-year earnings of $4.15 a share to $4.45 a share, below the consensus target of $4.56 a share, after posting fourth-quarter profit of $1.66 a share on revenue of $6.342 billion. Analysts, on average, expected fourth-quarter profit of $1.63 a share on revenue of $6.24 billion. Shares shed 1.1%.

Wall Street expects software company Salesforce.com(:CRM) to report quarterly earnings of 40 cents a share when it issues its results after the markets close Thursday. Shares were up 1.4% on Thursday.

Molycorp(:MCP) shares dropped 1.6% after the company announced a delay in filing its 10-K report and its postponement of its fourth-quarter and full-year 2012 earnings call.

BroadSoft(:BSFT) shares plunged 32.1% after the software provider gave current-quarter projections that were below estimates amid expectations of lower consumer applications revenue during the year.

Babcock & Wilcox(:BWC) shares jumped 2.2% after the power generation technology company swung to a fourth-quarter profit, helped by adjustments in pension plans and increased revenue at its power generation and nuclear operations divisions.

CommonWealth REIT(:CWH) shares fell 12.2% after it announced that its public offering of 30 million common shares was priced at $19 a share, a 16% discount to its closing price on Wednesday.

-- Written by Andrea Tse and Joe Deaux in New York

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