Wall Street's Rally Loses Steam Amid Mixed Data

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The Dow ended the day with in the red, while the Nasdaq modestly advanced, as traders mulled a mixed batch of economic data and traded cautiously following big gains earlier in the week.

Today’s Markets

The Dow Jones Industrial Average fell 25.7 points, or 0.21%, to 12020, the Standard & Poor's 500 slipped 2.4 points, or 0.19%, to 1245 and the Nasdaq Composite rose 5.6 points, or 0.22%, to 2626.

In contrast to the bullish start to this week, the markets wobbled most of the day as traders mulled disappointing weekly jobless claims, and an uplifting U.S. manufacturing report.

“We’ve got a hangover from what we saw yesterday,” Will Hedden, a trader at London-based IG Index said in an interview with FOX Business. “People are being very cautious after the big move yesterday.”

Thanks to emergency action from central banks around the world and upbeat economic signals, the blue chips rocketed 490 points higher on Wednesday -- their best performance since March 2009. Over the week's first three days, the benchmark index has surged 814 points, or 7.8% -- its biggest three-day rally in more than two years on a percent basis.

On Thursday, financials fell the most, while technology companies made the biggest advance, helping to list the tech-heavy Nasdaq. Boeing (NYSE:BA) flew more than 3% higher, leading the blue chips, while Travelers (NYSE:TRV) posted the weakest performance.

Traders continued moving out of U.S. government debt, seen as a safe haven asset, pushing yields higher. The benchmark 10-year note yielded 2.115% from 2.079%.

Stocks hit session highs on Thursday after the closely-watched Institute for Supply Management manufacturing index rose to 52.7 in November, up from 50.8 in October and beating estimates for 51.5. It also marked the highest reading since June 2011.

Separately, the Commerce Department said U.S. construction spending rose 0.8% in October, topping forecasts for a rise of 0.3%. It marked the third-straight monthly increase for this backwardly-looking report.

Both reports support a string of recent indicators showing the U.S. economy may be growing at a faster pace than some had feared.

On the other hand, the Labor Department said initial jobless claims rose by 6,000 last week and returned above the critical 400,000 level to 402,000. Economists had forecasted a decline to 390,000 claims. The government also upwardly revised the previous week’s claims levels.

This negative report comes on the heels of a considerably better-than-expected payroll survey from ADP that showed the private sector added 206,000 jobs in November. The all-important monthly employment report from the Labor Department is on tap for Friday.

Wednesday’s burst of buying came after the Federal Reserve, European Central Bank and four other major central banks launched a united effort to ease tight conditions in global money markets. The move involved extending lines to provide more dollar funding, at a cheaper price, to banks that need it, particularly in Europe.

Zach Pandl, an economist with Goldman Sachs, called the so-called currency swaps the “unsung hero” of the financial crisis in a note to clients, saying it played a “major role” in easing the market turmoil that began in 2007. However, Pandl also notes the maneuver “highlights the severity and reach of the European financial crisis.”  Indeed, market participants were still closely eyeing European bond markets on Thursday.

On the European front, Spain saw strong demand at its roughly $5 billion bond auction, while France, Europe’s second-biggest economy, saw the yields on its 10-year notes moderate. Bond yields indicate how much it costs countries to borrow on the private market, and the higher the yields, the more difficult it comes to refinance debt. Therefore, moderating yields help ease pressure on euro zone countries.

However, reports from China showing its manufacturing sector contracted for the first time in three years provided a counterbalance to the positive news out of Europe.

European blue chips fell 0.35%, while the euro climbed 0.4% to $1.349, extending big gains from the prior session. The U.S. dollar fell 0.25% against a basket of six world currencies.

On the corporate front, auto makers revealed sales figures from November. General Motors (NYSE:GM) said its U.S. sales climbed 7% year-over-year, while Chrysler posted a 45% surge in sales.

Massachusetts is suing five of the nation's biggest banks, including Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C) on allegations of deceptive mortgage practices.

Energy markets were mostly to the downside. The benchmark crude oil contract traded in New York fell 16 cents, or 0.16%, to $100.20 a barrel. This comes on the heels of a more than 7% gain in November. Wholesale RBOB gasoline slipped 0.02% to $2.58 a gallon.

Gold fell $10.50 a troy ounce, or 0.6%, to $1,740.

Foreign Markets

The English FTSE 100 rose 0.51% to 5,533.55 and the German DAX slid 0.47% to 6,060.26.

In Asia, the Japanese Nikkei 225 soared 1.93% to 8,597 and the Chinese Hang Seng spiked 5.6% to 19,002.