MARKET SNAPSHOT: U.S. Stock Decline Moderates With GDP Coming

By Kate Gibson

U.S. stock losses moderated Thursday afternoon, with the S&P 500 Index running into resistance at its 200-day moving average as a largely stellar earnings season took a back seat to worries about economic data and the recovery.

"The market is dealing with a bunch of conflicting signals," said Peter Boockvar, equity strategist at Miller Tabak.

After snapping a four-day win streak Wednesday, the Dow Jones Industrial Average (DJI) declined 45.33 points, or 0.4%, to 10,452.55, with 21 of its 30 components in the red, led by food maker Kraft Foods Inc. (KFT), off 2.5%.

Reversing course, shares of Dow component Exxon Mobil Corp. (XOM) were off 0.7% after the oil giant reported a near-doubling of second-quarter income. .

"The markets are becoming more cautious again as we get to the upper trading range on a great earnings season," said Bruce McCain, chief investment strategist at Key Private Bank.

U.S. economic data remains soft, and while the morning's better-than-expected drop in weekly jobless claims was positive, the labor market remains "sluggish," said Boockvar.

"We're still adding jobs, but not to the point that we should be at this point in the recovery," Boockvar said.

The market also fretted ahead of the government's reading on second-quarter economic growth, due Friday morning. Analysts expect U.S. gross domestic product slowed in the second quarter to an annual rate of 2.5% from 2.7% in the first.

The S&P 500 Index (SPX) fell 6.69 points, or 0.6%, to 1,099.44, with utility and consumer shares fronting losses that reached across all 10 of its industry groups.

Among the index's more noteworthy movers, shares of Citrix Systems Inc. (CTXS) surged 19% after the provider of software and equipment for computer business systems late Wednesday projected a stronger-than-expected quarter and year.

In the financial sector, Ameriprise Financial Inc. (AMP) rallied almost 12%. Late Wednesday, the investment manager reported a near-tripling of profit in the second quarter.

On the downside, Akamai Technologies Inc. (AKAM) shares fell almost 15% after the provider of services to online entertainment companies offered a disappointing outlook. Akamai shares had climbed more than 30% in the past three months on the belief that it would profit from demand for online media.

The Nasdaq Composite Index (RIXF) shed 16.27 points, or 0.7%, to 2,248.29.

Decliners bypassed advancers on the New York Stock Exchange, where volume neared 641 million at 2:15 p.m. Eastern.

Federal Reserve Bank of St. Louis President James Bullard warned against a Japan-style deflationary trap stemming from the central bank's extended period of low interest rates in a paper released Thursday.

The moderately hawkish Bullard noted that the 'extended period' language "is a double-edged sword that could cause a drop in inflation and inflation expectations, suggesting that the Fed buy more Treasuries instead to avoid turning Japanese," wrote analysts at Action Economics.

Still, Bullard told reporters he would not dissent against the policy language, the analysts added.

Ahead of Wall Street's start, stock futures added slightly to their earnings-inspired rise after the government said initial claims for unemployment benefits fell modestly, with the count slightly better than analysts had projected. .

(END) Dow Jones Newswires

July 29, 2010 14:37 ET (18:37 GMT)

Copyright (c) 2010 Dow Jones & Company, Inc.