US STOCKS-Wall St cuts losses on hope for lift from easy money

Thu Sep 20, 2012 3:40pm EDT

* Sluggish economic reports drag on stocks

* Trulia's stock jumps over 40 percent in its market debut

* Wal-Mart stops selling Amazon Kindles, Wal-Mart's stock up

* Dow up 0.1 pct, S&P 500 down 0.03 pct, Nasdaq down 0.2 pct

By Aleksandra Michalska

NEW YORK, Sept 20 (Reuters) - The Dow edged up while the S&P 500 and Nasdaq cut most of their losses on Thursday as investors shifted attention from weak manufacturing data around the world to the belief that central banks' easy money policies will help revive the global economy.

Pockets of strength in late afternoon trading included housing, with an index of housing stocks up 0.7 percent, along with energy and utilities. The S&P energy index was up 0.5 percent, reflecting gains in energy shares along with rising Brent and U.S. November crude oil prices. The S&P utilities index was up 0.4 percent.

In a bright spot for the market, Trulia Inc surged 48 percent to an intraday high of $25.20 in its market debut, as investors bet an improvement in the housing market would benefit the online real estate listing service. The stock was up 41 percent at $23.97 with just a half hour until the NYSE's closing bell.

A sobering picture of the global economy developed earlier Thursday, with the release of a string of economic indicators. U.S. manufacturing closed out its weakest quarter in three years this month, and the number of Americans filing new claims for jobless benefits held near two-month highs last week. The U.S. data followed similarly disappointing manufacturing reports from Europe and China.

The benchmark Standard & Poor's 500 Index has climbed 5.8 percent since the beginning of August, driven higher mostly by expectations of more stimulus from central banks. A week ago, the Federal Reserve announced its third round of stimulus or quantitative easing, known as QE3. Fed Chairman Ben Bernanke said the central bank should do all it can to encourage growth and get Americans back to work.

Boston Fed President Eric Rosengren said on Thursday that the Fed's actions last week "should result in stronger economic growth, and return us to full employment more quickly than would be the case, absent the policies." He was speaking to bankers and business leaders in the metropolitan Boston area.

In a sign of bullishness, UBS raised its target level for the S&P 500 by the end of 2012 to 1,525 from 1,375 on Thursday, saying equity markets will climb after aggressive monetary easing by central banks.

"Over the short run, we believe that the 'risk on' trade will continue, with a rotation into the most volatile and economically sensitive stocks," UBS' chief U.S. equity strategist Jonathan Golub wrote in a research note.

The Dow Jones industrial average rose 13.32 points, or 0.10 percent, to 13,591.28. The Standard & Poor's 500 Index dipped 0.36 of a point, or 0.02 percent, to 1,460.69. The Nasdaq Composite Index slipped 5.30 points, or 0.17 percent, to 3,177.32.

Transportation stocks, sensitive to the nation's economic fortunes, ranked among the worst performers, with the Dow Jones Transportation Average dropping 2.8 percent.

Railroad company Norfolk Southern Corp said late Wednesday that smaller shipments of coal and merchandise and lower fuel-surcharge revenue would crimp its third-quarter earnings, compared with a year earlier. Norfolk shares slumped 8.6 percent to $66.47.

"The economy is having trouble getting momentum," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "It seems to be slowing down a little bit."

Manufacturing in China contracted for an 11th straight month in September, according to a private-sector survey of factory managers; in the euro zone, a downturn in activity in the service sector steepened this month at the fastest pace since July 2009.

Retailers' shares also fell. Bed, Bath & Beyond tumbled 9.7 percent to $62.10 a day after the company posted quarterly results that narrowly missed Wall Street estimates on account of higher costs.

Fellow retailer J.C. Penney Co Inc slumped 10.5 percent to $26.04 after Chief Executive Ron Johnson said new shops within stores are doing much better than other parts of its department stores, but it was "way too early to draw conclusions" as the retailer is still rolling out the strategy.

The Morgan Stanley retail index slid 1.2 percent.

Facebook Inc's shares fell 2.6 percent to $22.68 after the company said it will start charging businesses to run promotional offers on its social network, turning a free service into a potential source of revenue.

Wal-Mart Stores Inc will no longer sell Amazon.com Inc's Kindle products, making it the second major chain to stop selling Amazon's devices, as the world's largest retailer makes a bet that consumers are more interested in other gadgets. Shares of Wal-Mart rose 0.3 percent to$74.60. Amazon's shares slipped 0.6 percent to $260.20.

Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.