Wall Street reacts
calmly to bad news

NEW YORK (AP) - Wall Street showed further signs of stability Thursday as investors calmly took in a flurry of downbeat economic and corporate data and largely held on to the gains they've made for more than a week.

The major stock indexes were fluctuating in a relatively tight range. The market, which has closed higher in seven of the last eight sessions, appeared to largely take in stride discouraging retail sales reports Thursday and big job cuts at AT&T Inc. and DuPont Co. as well as a weaker-than-expected profit forecast from the drug maker Merck.

Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, said traders have become somewhat more immune to the parade of terrible economic data since the market's two-day plunge on Nov. 19 and 20 that wiped 873 points, or 10.6 percent, from the Dow Jones industrials. He contends the bad readings have been built into many investors' expectations.

"The mind-set has changed a little. You just don't have that panic selling all day," he said. Rovelli predicts that barring a terrible reading on Friday's November employment report the markets will trade in a narrower range.

The mostly moderate moves, with the exception of a huge sell-off Monday, have led some analysts to believe that some order may be returning to the market after months of extreme volatility.

"I think you're just going to have down 100, up 200 days," Rovelli said, calling 300-point and 400-point moves in a day less likely as Wall Street becomes more accustomed to horrible economic reports.

But Wall Street still faces a great deal of uncertainty - for example, plunging consumer spending levels - that are still expected to set off volatility in the weeks and months ahead. Sales reports issued Thursday showed that retailers suffered a miserable November, deepening fears that the critical holiday period could be the most dismal in decades.

And the Labor Department's November employment report could, if it's worse than expected, send stocks falling sharply when it is released on Friday. The market is well aware that consumers who aren't working don't spend, and that consumer spending accounts for more than two-thirds of economic growth.

In midmorning trading, the Dow Jones industrial average rose 26.12, or 0.30 percent, to 8,617.81.

Broader stock indicators also rose modestly. The Standard & Poor's 500 index rose 3.41, or 0.39 percent, to 874.15, and the Nasdaq composite index rose 2.97, or 0.20 percent, to 1,495.35.

The Russell 2000 index of smaller companies rose 6.76, or 1.49 percent, to 460.52.

The number of stocks declining on the New York Stock Exchange narrowly outpaced those rising. Volume came to a moderate 217.3 million shares.

Bond prices showed investor demand remains high. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.63 from 2.67 percent late Wednesday.

The yield on the three-month T-bill, considered one of the safest investments, rose to 0.03 percent from 0.02 percent late Wednesday.

The dollar was mixed against other major currencies, while gold prices fell.

AT&T said it is cutting 12,000 jobs, or about 4 percent of its work force, because of the economic downturn. Chemicals maker DuPont Co. said it will cut 2,500 jobs, mostly serving the U.S. and European automotive and construction markets, due to lower demand.

Meanwhile, Merck & Co. said its profit will fall in 2009 due to restructuring costs, generic competition and slower sales of key products. Its forecast was below Wall Street estimates for next year.

Beyond the economic and corporate data arriving Thursday, investors examined the fate of the nation's top three automakers. Heads of the companies appeared before Congress with hopes of persuading skeptical lawmakers to save their troubled industry. General Motors Corp., Ford Motor Co. and Chrysler LLC are collectively seeking $34 billion in emergency aid.

While it might not come easily from Capitol Hill, investors largely expect some sort of resolution for the ailing companies.

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