By Chris Dieterich and Tomi Kilgore
NEW YORK--The S&P 500 closed in on another record finish
Thursday after an upbeat reading on weekly jobless claims, though
weakness in shares of drug makers helped push the Nasdaq Composite
lower.
The S&P 500 rose three points, or 0.2%, to 1877, putting the
index on course for its fourth record high in six sessions. The
benchmark rallied to an intraday record high of 1881.96 on
Thursday.
The Dow Jones Industrial Average rose 59 points, or 0.4%, to
16419, rising to within 1% of its Dec. 31 all-time high.
While blue chips advanced, recent weakness in highflying
biotechnology stocks pulled the Nasdaq Composite Index down five
points, or 0.1%, to 4349. The iShares Nasdaq Biotechnology Index
exchange-traded fund, one of the market's big gainers over the past
year, fell 2.6%. Gilead Sciences dropped 4.2%, while Vertex
Pharmaceuticals slid 3.7%.
Market participants were lightening up on strong performers
ahead of the government's February employment report due Friday, or
"locking in some gains," said Rick Fier, director of equity trading
at Conifer Securities.
Investors focused on fresh readings on the U.S. economy. The
S&P 500 has rallied 5.7% over the past month despite a string
of lackluster reports on manufacturing and housing. Many have
pinned the poor performance on the cold weather. The past two jobs
numbers have been weaker than forecast.
Economists surveyed by Dow Jones expect nonfarm payrolls to
increase by 152,000 in February, versus 113,000 in January. The
unemployment rate is expected to tick down one-tenth of one percent
to 6.5%.
Joseph Quinlan, chief market strategist for U.S. Trust, said
that U.S. stocks have been rising in recent weeks because investors
anticipate a "strong snapback in growth" after winter ends,
particularly from consumers. Stocks are likely to rise should
Friday's jobs report come close to expectations, but investors will
likely brush off a disappointing report and attribute any softness
to the weather, he said.
"A [jobs] number below consensus might be blissfully written off
as weather-related," said Mr. Quinlan, whose firm oversees roughly
$330 billion. "Until we get confirmation about this economy, it
might be a more jagged, volatile market, but the bias is up for
now," he said.
The Labor Department said Thursday that initial claims for
jobless benefits fell more than expected last week. Separately,
factory orders fell more than expected in January.
Some investors are leery of writing off recent economic reports
as weather-related anomalies.
"I wouldn't outright dismiss the plethora of data," said Paul
Simon, chief investment officer at Tactical Allocation Group, which
manages $1.2 billion in exchange-traded funds. Some downbeat
reports appeared before the recent cold snap, suggesting "there are
some holes in those arguments," he said.
Mr. Simon said he favors European and Japanese stocks to those
in the U.S., in part because central banks in those regions stand
ready to take more action, rather than less. The Federal Reserve is
in the process of winding down its monthly asset-purchase
program.
On Thursday, European Central Bank President Mario Draghi
reiterated that the central bank is ready to act if needed, but
refrained from introducing new stimulus measures to help the
euro-zone recovery.
European markets were broadly higher, after the ECB kept
interest rates unchanged. The Stoxx Europe 600 gained 0.1% to
finish at a six-year high. France's jobless rate fell to 10.2% in
the fourth quarter from the 10.3% in the third quarter, versus
expectations for a rise to 10.9%. German manufacturing orders
increased 1.2% in January, topping forecasts for a 0.8% rise.
Asian markets were broadly higher. In Tokyo, the Nikkei surged
1.6% to a five-week high after Japan's government revealed a plan
to diversify the portfolio of its giant pension fund to non-bond
vehicles, fueling expectations for large-scale stock purchases.
China's Shanghai Composite tacked on 0.3%.
The yield on the 10-year Treasury note ticked up to 2.737% from
2.698% late Wednesday.
Gold futures rose 0.8% to settle at $1,351.70 a troy ounce.
Crude-oil futures gained 0.1% to settle at $101.56 a barrel. The
dollar gained some ground against the yen, but slipped against the
euro.
Office-supplies retailer Staples slumped 17% after missing
fiscal fourth-quarter earnings and revenue estimates. The company
said it plans to close 225 stores by the end of 2015 as part of a
plan to cut costs by $500 million. Declines also weighed on Office
Depot, which slid 4.1%.
Costco Wholesale shed 3% after reporting fiscal second-quarter
earnings and sales that fell short of forecasts. Lower overseas
profits and weak results from nonfood merchandise categories
weighed on the results.
Pandora Media declined 5.4% even after reporting an increase
last month in listener hours and a boost to its market share.
Write to Chris Dieterich at chris.dieterich@wsj.com and Tomi
Kilgore at tomi.kilgore@wsj.com