NEW YORK – Stocks pared their gains Thursday after another batch of strong earnings had pushed the Dow Jones industrial average to the brink of its highest level of the year.
The upbeat earnings reports overshadowed mixed news on jobs and signs that growth in China slowed modestly during the third quarter.
The Dow rose more than 50 points in midday trading. It had been up as much as 105 points in morning trading after index components Caterpillar Inc., Travelers Cos. and McDonald's Corp. all beat expectations and AT&T Inc. matched forecasts.
Mining and construction equipment maker Caterpillar and insurer Travelers raised their earnings outlooks for the year after the strong results.
Some of the pullback could have simply been investors taking profits. Caterpillar hit a high for the year early in the morning before pulling back. United Parcel Service Inc.'s profit jumped and the shipping company raised its outlook. But it too retreated after coming within $1.00 of hitting its high for the year.
JetBlue Airways Corp. also reported strong earnings only to see its stock approach its 2010 high and then fall.
Daniel Penrod, a senior industry analyst for the California Credit Union League, said Thursday's batch of earnings is a signal that businesses are gaining confidence the economy will expand in the coming quarters and consumers will start spending more.
"This may be the beginning of the light at the end of the tunnel," Penrod said.
The Nasdaq composite index got a lift after online marketplace operator eBay Inc. and video subscription service provider Netflix Inc. reported upbeat quarterly results following the closing bell Wednesday.
The broad strength in earnings indicates companies are managing quite well even though the U.S. economy remains weak. International growth has helped many companies, but Thursday's results also show U.S. consumers are buying goods even if it's not at levels seen before the recession.
The Dow rose 51.46, or 0.5 percent, to 11,159.43 in midday trading. After a strong September, stocks are again proving to be resilient, able to quickly bounce back after any signs of economic uncertainty. The Dow is up 3.8 percent so far this month.
The Dow's highest closing level of 2010 was 11,205.03 on April 26. The Dow briefly crossed that level during morning trading.
The Nasdaq rose 8.13, or 0.3 percent, to 2,465.52.
The Standard & Poor's 500 index rose 4.70, or 0.4 percent, to 1,182.87. The S&P still remains well below its 2010 closing high of 1,211.07.
The Labor Department said first-time claims for unemployment benefits fell last week. But the decline was essentially offset by a surprisingly sharp upward revision to the previous week's claims. First-time claims remain stuck at levels that indicate companies are not hiring many workers, even though they aren't cutting many jobs either.
The Chinese government, meanwhile, said growth slowed to a still robust 9.6 percent in the third quarter. China has been trying to slow growth to a more sustainable level that keeps inflation from getting out of control. Slower growth could have an effect on exports and sales to the country. Many companies have relied on growth in China to offset weakness in U.S. and Europe's economies.
Travelers shares rose 63 cents to $55.27, while McDonald's climbed $1.56, or 2 percent, to $78.97. Caterpillar shares fell $1.66, or 2.1 percent, to $78.22.
AT&T fell 31 cents to $28.31.
Netflix surged $19.04, or 12.4 percent, to $172.19, while eBay rose $2.26, or 8.8 percent, to $27.92.
UPS dropped 14 cents to $69.51, while JetBlue was down 12 cents at $6.83.
Bond prices fell as investors moved into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.52 percent from 2.48 percent late Wednesday.
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