US stocks mixed on debt-ceiling fears

NEW YORK: US stocks ended mixed on Thursday, as nervous markets awaited a resolution to the debt-limit standoff in Washington, with the deadline for potential financial disaster only five days away.

The Dow Jones Industrial Average slumped 62.44 points (0.51 percent) to close at 12,240.11. It has now fallen for five straight trading days amid jitters over the debt-ceiling deadlock.

The broader S&P 500 fell 4.22 points (0.32 percent) to 1,300.67, while the tech-heavy Nasdaq Composite eked out a slight gain, rising 1.46 points (0.05 percent) to 2,766.25.

The US Treasury says that if the government's $14.29 trillion debt ceiling is not raised by Tuesday, it could be forced to default on its debts, an outcome seen as all-but-certain to have ruinous effects on financial markets.

But the standoff showed no signs of ending on Thursday as the Republican-led House of Representatives planned to vote on a debt-reduction plan which the Democrat-led Senate was almost certain to reject.

"The market needs and wants to see more concrete evidence of a deal getting done," said Scott Marcouiller, chief market technical strategist for Wells Fargo Advisors.

In a sign of Wall Street's alarm, the heads of more than a dozen US banks and major financial firms -- including Citigroup, Bank of America and Goldman Sachs -- wrote a joint letter to President Barack Obama and Congress appealing for a swift resolution.

stocks rallied early in the day after a suprisingly positive report on the US job market, but then fell back.

The US Labor Department said new claims for unemployment benefits fell to 398,000 last week, their lowest level in nearly four months and the first time they had fallen below 400,000 since early April.

Oil and gas giant ExxonMobil pulled down the Dow's average of 30 blue-chip stocks as it sank 2.2 percent on a disappointing earnings report.

The energy firm said that its second-quarter profits surged 41 percent from last year to $10.7 billion thanks to rising oil prices, but the results fell short of analysts' forecasts.

Goodyear plunged 7.2 percent after it reported record quarterly revenue of $5.6 billion but also warned that growing inflation in emerging markets and high materials costs would cut into future earnings.

Thomson Reuters gained 3.4 percent after reporting that its profits nearly doubled to $563 million in the second quarter.

Bond prices rose. The yield on the 10-year Treasury fell to 2.95 percent from 2.98 percent late on Wednesday, while the 30-year bond dropped to 4.26 percent from 4.28 percent.

Bond prices and yields move in opposite directions.

Copyright AFP (Agence France-Presse), 2011