NEW YORK — A rally that drove major stock indexes up 7 percent this week stalled Thursday. Stock indexes ended slightly lower, a day after the market posted its biggest gain in 2 1/2 years.
Goldman Sachs and other banks, the previous day’s star performers, gave up some of their gains. Costco, Nordstrom and other retailers rose after reporting stronger sales for November.
The Dow Jones industrial average fell 25.65 points, or 0.2 percent, to close at 12,020.03. Travelers lost 2.2 percent, the biggest drop of the Dow’s 30 stocks. Boeing had the biggest gain, 3.3 percent.
The Dow soared 490 points Wednesday, its seventh-best gain on record, on news that central banks around the world slashed borrowing costs for banks in order to shore up the European financial system and prevent a debt crisis there from spreading beyond Greece, Ireland and Portugal to much larger countries like Italy.
If a major European bank were to fail or if one or more countries there defaulted, investors fear it could result in a freeze-up in global lending markets like the one that occurred in 2008 after the collapse of Lehman Brothers.
Another rise in applications for weekly unemployment benefits dampened the mood Thursday. The Labor Department said initial applications rose to 402,000 last week, the second weekly increase in a row.
The figures didn’t change expectations for today’s government’s monthly labor report. Economists forecast that the unemployment rate will remain at 9 percent.
The S&P 500 slipped 2.37, or 0.2 percent, to 1,244.59. The Nasdaq composite inched up 5.86, or 0.2 percent, to 2,626.
Investors often turn cautious following giant leaps, said Sam Stovall, chief equity strategist at S&P Capital IQ. The Dow shot up 813 points in the first three days of the week as fears ebbed that Europe’s debt crisis would turn into a global panic.
Another trigger for the rally that started Monday was news that a record number of shoppers went to stores over the Thanksgiving weekend.
“It’s almost like rooting for a football team that won by a very big score,” Stovall said. The next day, people are likely wondering whether the big victory was a one-time event or the start of a lasting trend.
“Lately, it seems like nothing lasts that long,” he said.
