Stocks End Mixed on Upbeat GDP Report and Disappointing Earnings

Stocks were mixed after a choppy session Thursday as investors applauded a surprisingly strong third-quarter gross domestic product report but nonetheless worried that the pace of economic growth couldn’t be sustained.

Analysts said the GDP report didn’t give the market more of a boost because it reflected past economic performance. Disappointing earnings from Dow industrial Exxon Mobil also weighed on shares.

“The sustainability is the biggest question,” said Brian G. Belski, fundamental market strategist at US Bancorp Piper Jaffray. “The question is what is the current GDP and what will the growth be over the next three quarters?”

The Dow Jones industrial average closed up 12.08 points, or 0.1%, at 9,786.61, after a three-day gain of 192 points. Earlier in the day, the blue-chip average advanced as much as 64 points and lost as much as 20 points.

But the broader market declined modestly. The tech-laden Nasdaq composite index lost 3.87 points, or 0.2%, to 1,932.69. The Standard & Poor’s 500 index fell 1.17 points, or 0.1%, to 1,046.94.

Winners narrowly led losers on the New York Stock Exchange, while losers held a narrow edge on Nasdaq. Trading was heavy.

The Commerce Department reported Thursday that the nation’s gross domestic product grew at a 7.2% annual rate in the third quarter. It was the strongest pace since the first quarter of 1984; it also beat analysts’ estimates for a 6% growth rate.

Meanwhile, the Labor Department reported that new jobless claims last week declined by 5,000 to 386,000, signaling a slowdown in layoffs.

“Certainly the GDP number was good and the market celebrated that,” said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. “But no one expects this number to continue at this rate, and they do expect the numbers” to be eventually revised lower, he said.

Stocks have climbed since mid-March on investor expectations of a strong economic rebound. Although gains have been more modest in recent weeks, analysts say investors still are looking for reasons to buy despite some concerns that stock prices might be too high.

Cyclical industrial companies, whose fortunes tend to follow the strength of the economy at large, posted strong gains Thursday, with the Morgan Stanley index of cyclical stock rising 1.2% to a 52-week high. Among the index’s big gainers: Honeywell International, up 90 cents to $30.46, and International Paper, up 63 cents to $39.33.

Losers included Exxon Mobil, which fell $1.51 to $36.30, after the world’s biggest investor-owned oil company reported third-quarter earnings that missed analysts’ estimates. Oil prices, meanwhile, fell for the 13th time in the last 14 sessions, slipping 44 cents to $28.47 a barrel in New York trading.

The upbeat economic news helped the dollar stage a brief rally against its major rivals. It also boosted Treasury yields, but the Federal Reserve’s recent pledge to keep interest rates low comforted investors and provided bonds some support. The yield on the benchmark 10-year Treasury note rose for a second day, climbing to 4.34% from Wednesday’s close of 4.30%.

In other highlights:

* Martha Stewart Living Omnimedia rose 41 cents to $10.40 after the multimedia company reported a quarterly loss that was narrower than analysts’ predictions.

* Shares of Bebe Stores slid $2.72, or 9%, to $28 the day after the women’s clothing retailer said its chief financial officer was leaving the company.

* Akamai Technologies jumped $2.04, or 34.2%, to $8 after the provider of Internet speedup services posted a quarterly loss that was smaller than analysts’ predictions.

* Aetna declined $2.49 to $56.30 after the insurance giant posted a quarterly profit that came in higher than Wall Street’s projections.

Market Roundup, C6-7