Wall Street falters as FedEx drops, technicals eyed

NEW YORK (Reuters) - Stocks faltered on Thursday after mixed economic data kept Wall Street locked in a tight trading range, while FEDEX (FDX.NY)hares fell after it forecast profit below estimates.

The market got little direction after initial jobless claims dropped to a two-month low last week but remained high, and U.S. Mid-Atlantic factory activity contracted for the second straight month in September, but at a slower rate.

Package delivery group FedEx Corp reported quarterly profit more than doubled, but fell shy of expectations, and initiated a second-quarter outlook below expectations. Its shares fell 3.6 percent to $82.88.

Even so, market declines were light as traders tried to gauge whether stocks can recapture momentum. The S&P 500 has settled into the top of a trading rage and has found support at its 200-day moving average around 1,115 and resistance at 1,130.

"We've had a lot of negative things thrown at the market this morning, and it's battling back against a lot of economic and other fundamental negative news," said Tom Schrader, managing director of U.S. equity trading at Stifel Nicolaus Capital Markets in Baltimore.

The Dow Jones industrial average was off 12.79 points, or 0.12 percent, to 10,559.94. The Standard & Poor's 500 Index slipped 3.02 points, or 0.27 percent, to 1,122.05. The Nasdaq Composite Index gave up 5.06 points, or 0.22 percent, at 2,296.26.

A Reuters poll of institutional investors and strategists found U.S. stocks are expected to make strong gains before year-end as worries about a second recession subside.

(Additional reporting by Caroline Valetkevitch; editing by Jeffrey Benkoe)