U.S. stocks slip despite upbeat data

08:32, January 21, 2011      

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U.S. stocks ended lower on Thursday, ignoring the fact that most economic data came in better than expected and big bank posted strong earnings.

According to the Labor Department, the number of Americans applying for first-time unemployment benefits dropped sharply to 404,000 from a downwardly revised 441,000 last week. The decline was more than expected and also the biggest since February, a positive sign for the economy but failed to uplift the market.

Positive news of home sales didn't help boost the market as well. The National Association of Realtors said on Thursday that sales of previously owned homes increased 12.8 percent to a seasonally adjusted annual rate of 5.28 million units in December, the strongest sales pace since last May. However, 2010 was still the weakest year for home sales since 1997 in the United State, underscoring headwinds the housing market still faces.

Meanwhile, the Conference Board said that its index of leading economic indicators rose 1 percent last month after a 1.1 percent increase in November. Those are the biggest increases since March, suggesting the economy will strengthen over the next few months.

Despite all these positive economic signs, investors continued their sell-off on Thursday to lock in profits after recent market rally.

Adding to the pressure, there are concerns that surging growth in China will push government officials to take more measures to rein in the country's economy.

The latest data showed that China's economy accelerated in the fourth quarter, with gross domestic product rising 9.8 percent. At the same time, its inflation rose 4.6 percent in December, dipping a little from its 26-month peak in November, but still at a very high level.

On Corporate front, Morgan Stanley reported its earnings increased 60 percent during the last three months of 2010 on strong investment banking results.

The Dow Jones industrial average dipped 2.49 points, or 0.02 percent, to 11,822.80. The Standard &Poor's 500 index dropped 1. 66 points, or 0.13 percent, to 1,280.26 and the Nasdaq was down 21. 07 points, or 0.77 percent, to 2,704.29.

Source: Xinhua
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