Wall Street sputters on 'rally fatigue

The market showed little reaction to news that weekly US jobless claims fell for a second straight week.

US stocks swung lower Thursday as investors showed little reaction to generally positive economic and corporate news due to what one analyst called "rally fatigue."

The Dow Jones Industrial Average fell 49.96 points (0.49 percent) to 10,241.30 at 1615 GMT after streaking to another fresh 2009 high on Wednesday.

The Nasdaq composite shed 6.33 points (0.29 percent) to 2,160.57 while the broad-market Standard & Poor's 500 index dropped 5.79 points (0.53 percent) to 1,092.72.

Joseph Hargett at Schaeffer's Investment research said investors were unmoved by stronger-than-expected earnings from retail giant Wal-Mart and a better-than-expected report on US jobless claims, saying the market was suffering from "rally fatigue."

He said one factor may be the S&P 500's inability to break through the key technical level of 1,100 on Wednesday - which could be feeding this morning's sour mood. -

The market showed little reaction to news that weekly US jobless claims fell for a second straight week, suggesting modest improvement in the troubled labor market.

The seasonally adjusted number of new unemployment claims in the week ending November 7 fell to 502,000, a drop of 12,000 from the previous week's revised figure, the Labor Department said.

- This is another jobs indicator that is pointing to slowly -- as in, tortoise-like moves... improving labor market conditions - said Jennifer Lee at BMO Capital Markets.

Fred Dickson at DA Davidson & Co. said he remains positive on the market, which is supported by low interest rates from the Federal Reserve to help prop up the economy.

- Our view on the stock market remains constructive, although we expect increasing short-term pullbacks between now and year-end - he said.

- We learned long ago it does not pay to fight or trade against the Fed, especially during periods when the Fed is aggressively increasing monetary liquidity to the banking system. -

Among stocks in focus, Wal-Mart rose 0.81 percent to 53.40 dollars as the retail sector leader posted third quarter profits of 3.23 billion dollars, up 3.2 percent from a year ago and beating market expectations.

In the tech sector, 3Com surged 31.81 percent to 7.50 dollars following a takeover deal announced late Wednesday for Hewlett-Packard to buy the networking giant for 2.7 billion dollars. Hewlett-Packard slipped 0.22 percent to 49.89 dollars.

Intel jumped 0.29 percent to 19.90 dollars and Advanced Micro Devices surged 23.31 percent to 6.56 dollars after the two semiconductor giants announced a broad agreement to end their legal disputes over competition and patents.

Bonds rose. The yield on the 10-year US Treasury bond dipped to 3.463 percent from 3.482 percent Tuesday and that on the 30-year bond eased to 4.391 percent against 4.415 percent. Bond yields and prices move in opposite directions.