US stocks edged lower on Thursday as an upbeat report on business conditions in the mid-Atlantic region, coupled with data suggesting strength in the job market, signalled a reduced chance of interest-rate cuts. Shares of interest-rate sensitive plays, including banks, declined. But energy shares rose to lifetime highs and led advancers in the S&P 500 index after oil prices jumped more than $2 a barrel.
"To increase expectations that the Fed will be ready to cut rates, you really have to see the job market weakening, and with today's figures, that doesn't appear to be the case," said Subodh Kumar, chief investment strategist for Subodh Kumar & Associates in Toronto.
The Dow Jones industrial average declined 10.81 points, or 0.08 percent, to end at 13,476.72. The Standard & Poor's 500 Index dipped 1.39 points, or 0.09 percent, to finish at 1,512.75. The Nasdaq Composite Index shed 8.04 points, or 0.32 percent, to close at 2,539.38.
After the close, shares of Intuit Inc rose 3.5 percent to $28.68 in extended trade after the tax preparation software maker reported quarterly earnings that topped Wall Street expectations and it will buy back up to $800 million of its shares over the next three years.
During the session, the Dow hit an all-time intraday high at 13,516.71. The S&P 500 climbed to a fresh 52-week high at 1,517.14. The Federal Reserve Bank of Philadelphia gave a reading on May business activity that was generally optimistic.
Before the bell, the Labour Department said weekly first-time claims for unemployment insurance benefits were lower than expected. Investors had been eager for signs of economic weakness, pointing to a possible cut in rates by the Federal Reserve. A rate cut could lead to more business investment and improved corporate profits.
Shares of J.P. Morgan Chase dropped 0.8 percent to $52.56 on the New York Stock Exchange. An S&P index of financial stocks slipped 0.3 percent. In other economic news, Federal Reserve Chairman Ben Bernanke, in a speech in Chicago on the subprime mortgage market, said that a rash of US mortgage delinquencies was not expected to hurt the broader economy.
US crude oil for June delivery rose $2.31 to settle at $64.86 a barrel on the New York Mercantile Exchange as US refinery problems fanned concerns about potential gasoline supply bottlenecks just before the summer-driving season begins.
Exxon Mobil Corp rose 0.4 percent to end at $81.80, after hitting a lifetime high of $82.44. Chevron Corp climbed to a lifetime high at $82, before ending up 0.9 percent at $81.46. The American Stock Exchange index of oil companies gained 1.5 percent.
"Energy shares continue to be the area that's in play, and part of that is because there's nothing else to replace it," said Jim Fehrenbach, head of Nasdaq trading at Piper Jaffray in Minneapolis. "It's a market that lacks leadership." But shares of industrial companies with big energy appetites, including General Electric Co and Caterpillar Inc, dropped.
GE fell 0.8 percent to $36.53 and was the top drag on the S&P 500 index. Caterpillar, which was the top drag on the Dow average, slid 1.5 percent to $74.84. In Nasdaq trading, shares of Sun Microsystems Inc rose 3.5 percent to $5.30 after the company announced plans for a $3 billion share buyback.
J.C. Penney Co shares advanced 5.2 percent to $79.65 on the NYSE after the department-store operator posted a 13 percent rise in quarterly profit, helped by sales of higher-margin private-label brands. The retailer also raised its full-year earnings forecast. The stock had its best day in about a year.
Volume was moderate on the NYSE, where about 1.46 billion shares changed hands, below last year's estimated average daily volume of about 1.64 billion. On the Nasdaq, about 2.01 billion shares traded, slightly below last year's daily average of 2.02 billion. Decliners outnumbered advancers by a ratio of about 5 to 3 on both the NYSE and the Nasdaq.