NEW YORK (AP) — Wall Street wobbled in erratic trading Thursday as investors grew nervous that new corporate forecasts and a larger-than-expected increase in U.S. jobless claims are further signs of a weakening economy. The major indexes shuttled between gains and losses.
Investors seemed to be looking for bargains after a two-day selloff that slashed nearly 750 points from the Dow Jones industrials, but there was clearly little conviction behind any buying. There is a growing belief on the Street that the economy is either in a recession or headed for one despite government relief efforts and gradual improvements in world credit markets.
Wall Street digested a rush of corporate news. Goldman Sachs Group Inc. is preparing to cut about 10 percent of its work force, according to a person briefed on the plan who requested anonymity because the company hadn't publicly disclosed details of the plan.
Meanwhile, drugmaker Eli Lilly and Co. said it booked a loss for the third quarter on a charge of almost $1.5 billion for an expected settlement of an investigation into the marketing of its top-selling drug, Zyprexa, while Dow Chemical Co. said quarterly profit rose 6 percent, helped by price hikes that offset a nearly 50 percent increase in raw materials and energy costs.
Economic readings didn't offer investors relief. The Labor Department reported Thursday that new applications for unemployment benefits rose 15,000 last week to a seasonally adjusted 478,000. That was slightly above analysts' estimates of 470,000. Jobless claims above 400,000 are considered a sign of recession. A year ago, claims stood at 333,000, the department said.
Investors viewed the data as more evidence that the financial crisis is battering the economy and forcing companies to cut back. Market anxiety was already high as investors sift through a batch of bleak corporate forecasts that has stirred intense nervousness about the health of the global economy.
The Dow rose 44.36, or 0.52 percent, to 8,563.57 after earlier falling more than 100. On Wednesday, the Dow fell 514 points as investors worried that the global economy is poised to weaken even as parts of the credit market slowly show signs of recovery. That was on top of a 231-point loss Tuesday.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 3.57, or 0.40 percent, to 900.35, and the Nasdaq composite index fell 3.40, or 0.21 percent, to 1,612.35.
Declining issues outnumbered advancers by about 7 to 6 on the New York Stock Exchange, where volume came to 223 million shares.
Credit markets continued to show signs of slow improvement, although figures released Thursday suggested that a return to more normal market conditions will take time. The rate on three-month loans in dollars — known as the London Interbank Offered Rate, or Libor — was unchanged at 3.54 percent. The rate fell to that level on Wednesday and is the lowest since Sept. 24.
Demand for short-term Treasury bills, regarded as the safest assets around, fell slightly. The three-month Treasury bill yielded 1.03 percent, up from 1.01 percent late Wednesday. The levels are a notable improvement from the 0.20 percent seen last week, when investors were willing to trade the slimmest of returns for a safe place to keep their money.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.59 percent from 3.60 percent late Wednesday.
The dollar was mixed against rival currencies after jumping to multiyear highs Wednesday, while gold prices fell.
In corporate news, hotel and leisure company Starwood Hotels & Resorts Worldwide Inc. said its third-quarter profit fell 12 percent and warned that 2009 will likely result in worldwide softening in revenue-per-available-room inflows and a "significant" pullback on capital expenditures for owned hotels and the vacation ownership business.
Goldman Sachs fell $3.71, or 3.2 percent, to $111. Eli Lilly rose 60 cents to $32.71, while Dow Chemical rose $1.65, or 7.5 percent, to $23.76.
Light, sweet crude rose $1.45 to $68.20 on the New York Mercantile Exchange. The contract on Wednesday fell to a new 16-month low as big increases in U.S. crude and gasoline stocks fed beliefs that the economic downturn is eroding demand for energy.
The Russell 2000 index of smaller companies fell 2.35, or 0.47 percent, to 499.62.
Overseas, Japan's Nikkei stock average fell 2.46 percent. Britain's FTSE 100 was up 0.65 percent, Germany's DAX index was down 0.33 percent, and France's CAC-40 was up 0.01 percent.
