By Edward Krudy
NEW YORK (Reuters) - Stocks slipped on Thursday as mixed economic data and a downbeat forecast from economic bellwether FedEx Corp kept the market in its recent tight trading range.
Shares in FedEx
A drop in initial jobless claims to a two-month low last week was not enough to lift stocks, while a gauge of business activity in the U.S. Mid-Atlantic showed a contraction for a second straight month in September.
The Philadelphia Fed's survey, expected by a Reuters poll of economists to show growth in manufacturing, was a reminder of the pressure still on the recovery.
The S&P 500 has settled into the top of a trading range and found support at its 200-day moving average around 1,115 and resistance to trading above 1,130. Attempts to advance beyond 1,130 have been thwarted several times since June, and on Tuesday the S&P 500 made an intraday high above 1,227.
Losses were light on Wednesday, however. Dan Cook, senior market analyst at IG Markets in Chicago, said that anticipation of a breakout was keeping traders from going short while they continued to probe toward the resistance level.
"People are reluctant to get in there and sell because if we do get that break, all of a sudden anyone that is short gets rolled right out of the market, the stops get hit and it can be a big pop," he said. "It's a legitimate concern for a lot of traders."
The Dow Jones industrial average <.DJI> dropped 15.02 points, or 0.14 percent, to 10,557.71. The Standard & Poor's 500 Index <.SPX> fell 4.81 points, or 0.43 percent, to 1,120.26. The Nasdaq Composite Index <.IXIC> lost 9.67 points, or 0.42 percent, to 2,291.65.
Weakness in FedEx, down 4 percent to $82.47, spilled over to the rest of the sector. Rival United Parcel Service Inc
FedEx's results and forecast are "a clear indication that the economy is not accelerating to the upside but rather muddling through, with cost containments a key driver in FedEx's numbers," said Chad Morganlander, a portfolio manager at Stifel Nicolaus & Co in Florham Park, New Jersey.
VOLATILITY BET FOR RIM SHARES
Ford Motor Co
Analysts in the options market said traders were signaling expectations of high volatility in Research in Motion Ltd's
Going into expirations, the price of September straddles, an option strategy that makes money when a stock moves sharply in either direction, showed the shares would have to move $4 in either direction by Friday's close to become profitable. RIM's U.S.-traded shares rose 1.1 percent to $46.02.
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.
Volume was on track to be light again with 3.81 billion shares traded going into the second half of the session. On the New York Stock Exchange, declining shares outnumbered advancers by about 3-to-2.
(Reporting by Edward Krudy; editing by Padraic Cassidy)
