U.S. Stocks Fluctuate After Jobless Claims Top Forecasts

By Kayla Carrick

Aug. 20 (Bloomberg) -- U.S. stocks drifted between gains and losses after an unexpected increase in jobless claims tempered speculation the worst recession in seven decades is almost over. Treasuries and crude oil were little changed.

Sears Holdings Corp., the biggest U.S. department-store company, tumbled 12 percent after reporting an unexpected second-quarter loss. Google Inc. added 1.9 percent after being added to Goldman Sachs Group Inc.’s “conviction buy” list. Investors will also watch data on leading economic indicators and manufacturing in the Philadelphia region.

The Standard & Poor’s 500 Index added 0.2 percent to 998.32 at 9:35 a.m. in New York. The Dow Jones Industrial Average rose 9.75 points, or 0.1 percent, to 9,288.91. The Nasdaq Composite Index increased 0.3 percent to 1,974.45.

“We’ve had a spurt of really good numbers over the last few months and we’ve come away from the abyss,” said Michael Vogelzang, chief investment officer of Boston Advisors LLC, which manages $1.7 billion. “But we can’t lose sight of the fact that we’re in a very murky environment for the general economy. You’re going to get good numbers and bad numbers. With these mixed signals, we’re going to have a pretty choppy September.”

Stock-index futures erased earlier gains before the open of exchanges as the Labor Department said applications for jobless benefits rose to 576,000 in the week ended Aug. 15 from a revised 561,000 the week before. The number of people collecting benefits the week earlier was little changed at 6.24 million.

Rally Built on Recovery Speculation

The S&P 500 has climbed 47 percent from a 12-year low in March amid speculation the worst of the recession has passed. Edward McKelvey, a senior economist at Goldman Sachs Group Inc., said yesterday the contraction may already be over. He cited the gain in industrial production in July, helped by the government’s cash-for-clunkers program, along with the likelihood that output will continue to grow because of depleted inventories.

The Conference Board’s gauge of the economic outlook for the next three to six months rose 0.7 percent for a second month, according to the median forecast of 52 economists surveyed by Bloomberg News. The report is due at 10 a.m. Washington time. Other data may show manufacturing in the Philadelphia region contracted at a slower pace.

Sears tumbled 12 percent to $65.20. The second-quarter loss was triggered by pension-plan expenses, severance payments to fired employees and costs to close stores. The net loss was $94 million, or 79 cents per share. The average analyst estimate was for earnings of 35 cents per share.

Google, the owner of the world’s most popular search engine, climbed 1.9 percent to $452.44.

Per-share profits topped analysts’ estimates by an average of 9.9 percent for the companies in the S&P 500 that have reported results since June 17, data compiled by Bloomberg shows. Earnings slid 29 percent on average, a record eighth straight quarter of falling profits.

To contact the reporter on this story: Kayla Carrick in New York at kcarrick1@bloomberg.net