Stocks Lose Steam on Mixed Economic News
NEW YORK ( TheStreet) -- Stocks closed higher as investors weighed improved reads on jobless claims data against disappointing manufacturing and construction spending numbers.
Initial jobless claims fell 2,000 to 351,000 during the week ended Feb. 25 from a revised 353,000 in the previous week, according to a Labor Department report. Claims data met analysts' expectations according to Thomson Reuters. The four-week moving average fell 5,500 to 354,000 from a revised 359,500.
However, stocks pared gains slightly after the Institute for Supply Management reported that its manufacturing index dropped to 52.4 in February. While the data showed that manufacturing is still expanding, it missed expectations for a reading of 54.5, according to economists polled by Thomson Reuters. The index came in at 54.1 in the prior month.
The Commerce Department's reading on construction spending dropped 0.1% in January for the first time in six months. Economists polled by Thomson Reuters expected it to tick 1% higher, adding to a 1.5% rise the prior month.
Personal incomes rose 0.3% to $37.4 billion in January according to a Commerce Department report, falling just short of expectations of a 0.4% rise according to analysts polled by Thomson Reuters. Personal spending rose 0.2% to $23.2 billion for the month, again falling short of expectations of a 0.3% increase.
Ian Sheperdson, economist with High Frequency Economics, notes that consumers may have spent less on utility services due to exceptionally warm weather. "Since its July peak, we reckon monthly spending on utilities has dropped by some 17%; we expect a rebound over the next few months. Still, the soft November, December and weak Jan mean first quarter spending will likely rise only 1%."
Stocks opened March with more gains after February closed with the Dow up 6% and the S&P 500 up 8.6% so far in 2012. In the prior session, the market finished lower after Federal Reserve chief Ben Bernanke suggested that the economy didn't warrant further economic stimulus.
"The market is headed for a breather period after a very good start to the year," said Tom Villalta, lead portfolio manager with Jones Villalta Asset Management. "We're going to see a fair amount of volatility from now until mid-April," he added, explaining that first quarter earnings would likely be the next major catalyst for the market.
In Europe, a two-day summit kicked off at which eurozone leaders will discuss how to increase the region's bailout fund. The meeting comes after international creditors at a G20 meeting put pressure on Europe to increase its own funding before asking for additional outside resources. After the summit wraps up Friday, European Union leaders are expected to finalize Greece's $173 billion aid package, according to Bloomberg.