Wall Street pauses after Fed-fueled rally

The Dow Jones Industrial Average wobbled higher by 12.55 points (0.13 percent) to 9,374.16 at 1440 GMT in choppy action a day after gains of more than one percent in the main indexes.

The Nasdaq composite added 7.60 points (0.38 percent) to 2,006.32 and the broad-market Standard & Poor’s 500 index edged up 3.30 points (0.33 percent) to 1,009.11.

The market was digesting Wednesday’s gains sparked by comments from the Federal Reserve, which said the US economic is ‘leveling out’ and indicated it would start rolling back a portion of its massive stimulus.

Meanwhile overseas, data showed Germany and France unexpectedly emerged from recession while the 16-nation eurozone economy shrank by just 0.1 percent in the second quarter in new signs that a global recovery is taking shape.

In the US, some of the optimism was dented by news that retail sales unexpectedly dipped 0.1 percent in July, highlighting ongoing consumer weakness, and by a small rise in weekly US jobless claims.

The soft retail figures were ‘consistent with continued weakness in consumer spending outside of auto clunker sales,’ said Scott Hoyt at Moody’s Economy.com.

Analysts said news of a rise of in new US jobless claims by 4,000 in the past week to 558,000 was not a major factor.

Jon Ogg at 24/7 Wall Street said the report was ‘a tad worse than expected’ but ‘close enough that this will not be a huge influence.’

Analysts said however the market needs to consolidate gains of some 15 percent over the past few weeks and roughly 50 percent from its lows in March.

‘We continue to see evidence that the upward market momentum seen over the last month is beginning to slow,’ said Fred Dickson at DA Davidson & Co.

‘The good news is that institutional investors underweighted in equities continue to use minor dips to move money from Treasuries or money market funds into stocks, thus keeping market pullbacks short and shallow.’

Bob Dickey at RBC Wealth Management said the market continues to bounce back from its dips, as investors pour in cash from the sidelines.

‘We continue to be plagued by a market that refuses to have the well-accepted big pullback to allow investors to buy stocks at very low prices again,’ he said.

‘Many market followers realize that a very strong uptrend cannot last forever, but it sure can go on for a lot longer than anyone would expect, and could also go much higher than one would believe.’

Among stocks in focus, Wal-Mart gained 1.17 percent to 51.01 dollars after the world’s biggest retailer reported a stronger-than-expected quarterly profit of 3.44 billion dollars and issued guidance in line with forecasts.

But rival retail discounter Kohl’s fell 2.77 percent to 50.82 dollars as it reported profit in line with forecasts but warned of weakness in the coming months.

Ford Motor Co. revved up 2.34 percent to 7.88 dollars after announcing it would boost production to meet increased demand resulting from the government’s ‘Cash for Clunkers’ trade-in incentives.

Microsoft added 0.13 percent to 23.56 dollars as it announced plans to release a new version of its portable Zune music player later this year featuring a touch screen, Web browser, Wi-Fi connectivity and high-definition radio receiver.

Bonds firmed, recouping some losses from the prior session. The yield on the 10-year US Treasury bond eased to 3.659 percent from 3.701 percent Wednesday and that on the 30-year bond fell to 4.499 percent from 4.523 percent. Bond yields and prices move in opposite directions.