Stocks finished lower Thursday, as a trifecta of downbeat U.S. economic reports overshadowed encouraging signs out of corporate America and Europe.
The Dow Jones industrial average dropped 69 points, or 0.5%, with McDonalds and Alcoa dragging on the blue-chip index. Travelers and Verizon were the biggest gainers, as both companies topped earnings expectations.
The S&P 500 fell 8 points, or 0.6%, while the Nasdaq lost 24 points, or 0.8%. eBay was the best performer on both indexes, with shares surging more than 13%. The e-commerce company reported strong financial results for the quarter, and also raised its outlook for 2012.
Trading was choppy Thursday. Earlier in the session, the Dow and the S&P 500 were up over 0.3%, while the tech-heavy Nasdaq had climbed 0.9%.
On the economic front, first-time unemployment claims declined but were still higher than what analysts expected. Adding to the setback, existing home sales dipped 2.6%, a sign that the housing recovery remains on shaky ground. The Philadelphia Fed regional manufacturing index also fell, coming in below expectations.
"We're getting some reminders that the U.S. economy is not in spectacular shape," said Matt King, chief investment officer at Bell Investment Advisors. "It's growing, but at a very slow rate. With every two steps forward, it's taking one back."
Corporate earnings, on the other hand, have been better than expected. Of the 105 companies in the S&P 500 that have reported quarterly results, more than 80% beat expectations, while 11% missed forecasts, according to Thomson Reuters. Analysts are expecting overall S&P 500 first-quarter earnings to climb 6%, with revenues edging up 5%.
Meanwhile, investors were also mildly relieved that an auction of €2.5 billion of Spanish 10-year bonds drew strong demand.
But Spain released a relatively low volume of bonds, helping to ensure that demand, noted Brian Barry, a fixed income analyst with Investec in London.
"They're trying to manage expectations," Barry said. "It's not necessarily a ringing endorsement of Spanish bonds." The yield on the 10-year note shot up to 5.92% following the auction. Italian bond yields also rose, underscoring the continuing concern about Europe's fiscal situation.