Big-cap buying offsets earlier Wall Street dip

US equities pared most losses in a late-day surge yesterday, driven by investors snapping up big-cap names and the notion that concerns about the jobs picture, which helped spur the buying of safe-haven government debt, were overblown.

New US claims for jobless benefits fell only slightly last week, according to the Labor Department, missing forecasts for a greater decline, while the prior week’s number was revised up.

Some investors said the data undercut optimism about US job growth, and Federal Reserve chairman Ben Bernanke said again that the US economy’s recovery was relatively weak.

Yet a late-day surge suggested investors had second thoughts about the jobs report, which showed initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 359,000, the lowest level since April 2008.

Investors seeking to spruce up the release of their quarterly holdings also helped the major US stock indexes to rebound from losses of one per cent or more.

Separately, a report on the Commerce Department’s final estimate of GDP showed that the economy expanded by three per cent in the fourth quarter, as expected.

“It’s hard to take away the end-of-the-quarter price action. People are buying winning stocks, and the claims data, which was a bit shy of expectations, is still showing that we are at OK levels. That’s enough to keep investors happy,” said Nicolas Colas, chief market strategist at ConvergEx Group in New York.

The Dow Jones industrial average closed up 19.61 points, or 0.15 per cent, at 13,145.82. The Standard & Poor’s 500 Index fell 2.26 points, or 0.16 per cent, at 1,403.28. The Nasdaq Composite Index slid 9.60 points, or 0.31 per cent, to 3,095.36.

Despite the S&P 500 posting a third day in a row of declines, the benchmark index is still up 2.8 per cent in March and nearly 12 per cent for the year, its best start since 1998.

Caterpillar and Coca-Cola added the most to the Dow. Caterpillar rose 1.7 per cent to $106.02, while Coke gained 1.6 per cent to end at $73.81 after hitting a new 52-week high of $74.39 earlier in the session.

Oil prices fell for a third straight session, snapping key technical support after growing talk of a release of strategic petroleum reserves by consumer nations spurred profit-taking.

Brent crude futures fell $1.77 to settle at $122.39 a barrel. US crude futures lost $2.63 to settle at $102.78 a barrel. After a 1.8 per cent drop on Wednesday, it was the biggest two-day slide since mid-December.

Pressure is mounting to tackle high fuel prices ahead of French elections.

Saudi Arabia’s Oil Minister Ali al-Naimi also attacked high oil prices in a rare opinion piece published in the Financial Times on Wednesday.