Unemployment claims and worries about Europe’s economy keep US stock prices in check

Stocks erase losses on modest rise in home sales

NEW YORK — Stocks turned mixed Thursday after slightly better news on home sales and leading indicators offset concerns about Europe’s economy and the U.S. job market.

Market indexes were mainly flat in afternoon trading after a gauge of future economic activity rose modestly and home sales climbed from 15-year lows in August. Stocks had fallen sharply at the opening after claims for unemployment benefits jumped unexpectedly last week and new signs emerged of a slowdown in Europe.

The Dow Jones industrial average fell 5 points in afternoon trading after being down as much as 94 shortly after the opening bell.

Thursday’s turnaround “really shows we have healthy sentiment,” said Anthony Chan, chief economist at J.P. Morgan Private Wealth Management. “It shows the market can ignore some bad news if it’s somewhat balanced with encouraging data.”

The National Association of Realtors said sales of previously occupied homes rose 7.6 percent last month after plummeting in July. The rebound was encouraging, but volume remains weak and August was still the second-worst month for sales in more than a decade. Some analysts are hopeful that home sales have bottomed out.

Chan said expectations for the housing market were “so dire” that any signs of growth is considered positive.

The Conference Board, a private research group, said its index of leading economic indicators increased more than expected in August. The gauge is designed to predict future growth, so a jump in the index means the economy will likely continue to expand in the coming months.

“We keep getting confirmation that things are not getting worse,” said Tim Harder, chief investment officer at Peak Capital. The actual numbers aren’t great, but relative to a few months ago they indicate the economy is moving in the right direction, he said.

“Bad is better than awful,” Harder said.

The Dow Jones industrial average fell 4.92, or 0.1 percent, to 10,734.55 in afternoon trading.

The Standard & Poor’s 500 index fell 0.73, or 0.1 percent, to 1,133.55, while the Nasdaq composite index rose 13.13, or 0.6 percent, to 2,347.68.

Traders were initially disappointed to see first-time unemployment claims rise last week, breaking a recent trend of declines. The Labor Department said claims jumped by 12,000 and are still at levels that signal employers are not significantly adding new jobs. Economists polled by Thomson Reuters had forecast claims would remain unchanged.

Unemployment claims had fallen consistently in recent weeks, reducing worries that the economy might fall back into recession. Modest improvements in many economic reports have driven stocks sharply higher in September. The Dow Jones industrial average rose 13 of the past 16 days, but broke a five-day winning streak on Wednesday.

European markets fell and the euro dropped against the dollar after a closely watched reading on business activity in the 16 countries that use the euro weakened more than expected. It was the latest sign of trouble in Europe, which investors had largely stopped worrying about since a debt crisis in Greece eased this spring.

Britain’s FTSE 100 fell 0.1 percent, Germany’s DAX index dropped 0.4 percent, and France’s CAC-40 fell 0.7 percent.

In corporate news, McDonald’s Corp. became the latest company to increase its dividend. The world’s biggest hamburger chain raised its dividend 11 percent. Its shares rose 3 cents to $75.16.

Falling stocks narrowly outpaced those that rose on the New York Stock Exchange, where volume came to 444.2 million shares.

Bond prices rose for a third day on expectations that the Federal Reserve will restart a bond-buying program as a way to stimulate the economy by keeping interest rates low and encouraging borrowing.

The yield on the 10-year Treasury note, a widely used benchmark for consumer and business loans, fell to 2.54 percent from 2.55 percent late Wednesday.