NEW YORK — Stocks dipped Thursday as investors locked in their positions at the end of the year.
While U.S. markets fell slightly, stocks are set to end 2010 on an upbeat note: The Standard & Poor’s 500 and the Dow Jones industrial average are both up 14 percent for the year after dividends, thanks to record corporate profits.
The Dow is back to levels last seen in August 2008, prior to the heat of the financial crisis, while the S&P might just eke out its best December in 20 years.
“We’ve had a heck of a month for stocks,” said Walter Todd of Greenwood Capital Associates in Greenwood, S.C. “It’s no surprise to see investors taking a bit of a pause after a big run-up. However, the positive catalysts are still in place, and that bodes well for a very decent 2011. Today’s jobless-claims figures were a real big positive.”
The Labor Department said the number of first-time applications for jobless benefits dropped by 34,000 to 388,000, the fewest since July 2008.
The S&P 500 advanced 23 percent from its July low through Wednesday as companies reported better-than-estimated earnings and as the Federal Reserve pledged to buy up to $600 billion in Treasurys to stimulate the economy. Its rally to a two-year high pushed its valuation to 15.7 times reported profits, the highest since June.
The index’s 86 percent increase from a 12-year low March 9, 2009, is the biggest for a comparable time period since 1955, according to Howard Silverblatt, senior index analyst at S&P.
Some investors are taking the last week of the month to sell and notch their profits. Others are selling stocks or funds that have lost money in order to reap the tax benefits.
The Dow Jones industrial average was off 15.67 points, or 0.1 percent, to 11,569.71. The S&P 500 edged down 1.90, or 0.2 percent, to 1,257.88. The technology-focused Nasdaq composite fell 3.95, or 0.2 percent, to 2,662.98.
The week has been marked by thin trading, and fewer traders are expected to show up today, the last day of the year.
The Chicago Purchasing Managers Index for December showed that companies in the Midwest were faring better than analysts anticipated. The index came in with a reading of 68.6, up from 62.5 in the previous month.
