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Stocks dip below record levels on Wall Street

Published: Thursday, May 9 2013 10:54 a.m. MDT

Trader Gregory Rowe works on the floor of the New York Stock Exchange Tuesday, Feb. 26, 2013.  Strong earnings reports from Home Depot and Macy's helped lift stock indexes in early trading on Wall Street Tuesday. A jump in home sales and consumer confidence also brought buyers back to the market. (Associated Press) Trader Gregory Rowe works on the floor of the New York Stock Exchange Tuesday, Feb. 26, 2013. Strong earnings reports from Home Depot and Macy's helped lift stock indexes in early trading on Wall Street Tuesday. A jump in home sales and consumer confidence also brought buyers back to the market. (Associated Press)

NEW YORK — The stock market pulled back early Thursday after surging to record levels during the past week as investors judged that recent gains already reflect much of the improvement in the economy.

Even a decline in the number of Americans applying for unemployment benefits failed to boost stock prices. Unemployment claims dropped to a five-year low last week, signaling fewer layoffs and possibly more hiring.

An improvement in hiring has been one of the factors helping to push stocks to record levels. The Dow Jones industrial average climbed above 15,000 for the first time Tuesday and is on track to notch six straight months of gains. The Standard and Poor's 500 index also closed at a record high Wednesday.

As stocks have climbed, the bar for reports on the economy and for corporate earnings has risen, said JJ Kinahan, chief derivative strategist at TD Ameritrade.

"When you hit market highs like this the pressure on the numbers, the pressure on all the numbers, be it government numbers or earnings, becomes more intense," said JJ Kinahan, Chief Derivatives Strategist at TD Ameritrade. "You have to beat by a lot to really move the market higher."

In this Thursday, June 7, 2012, file photo, Federal Reserve Chairman Ben Bernanke appears on a television screen on the floor of the New York Stock Exchange. Americans' wealth dipped about 0.5 percent in the April-June quarter as a drop in stock prices more than offset a gain in home values. Yet since June, a resurgent stock market has jumped about 7 percent; more than reversing last quarter's 3 percent drop in stock prices.  (Associated Press) In this Thursday, June 7, 2012, file photo, Federal Reserve Chairman Ben Bernanke appears on a television screen on the floor of the New York Stock Exchange. Americans' wealth dipped about 0.5 percent in the April-June quarter as a drop in stock prices more than offset a gain in home values. Yet since June, a resurgent stock market has jumped about 7 percent; more than reversing last quarter's 3 percent drop in stock prices. (Associated Press)

Rising corporate earnings, another support for the stock market, were also in focus on Thursday.

Tesla Motors soared $14.73, or 26 percent, to $70.34, after the electric car maker posted its first quarterly net profit since it was founded a decade ago. Green Mountain Coffee Roasters surged $14.42 or 24.5 percent, to $74.06 after the company reported late Wednesday that its net income rose 42 percent. It also raised its earnings forecast for the full year.

Monster Beverage, the maker of energy drinks, fell $3.63, or 6.4 percent, to $53.31, after it reported net income that fell short of analysts' estimates. The company's profits fell 17 percent, despite stronger sales, because of unfavorable currency rates, legal expenses and costs tied to distribution agreements.

Almost 90 percent of the companies in the S&P 500 index have reported earnings for the first quarter. Earnings are projected to rise 5 percent for the period and continue climbing throughout the year, according to S&P Capital IQ.

A board overlooking the floor of the New York Stock Exchange shows an intraday number above 1,600 for the S&P 500, Friday, May 3, 2013. A big gain in the job market is lifting the stock market to a record high. The Dow Jones industrial average crossed 15,000 for the first time, and the Standard and Poor's 500 index, a broader market measure, rose above 1,600.(AP Photo/Richard Drew) (Associated Press) A board overlooking the floor of the New York Stock Exchange shows an intraday number above 1,600 for the S&P 500, Friday, May 3, 2013. A big gain in the job market is lifting the stock market to a record high. The Dow Jones industrial average crossed 15,000 for the first time, and the Standard and Poor's 500 index, a broader market measure, rose above 1,600.(AP Photo/Richard Drew) (Associated Press)

The Dow fell nine points, or 0.04 percent, to 15,098 as of 12:39 p.m. Eastern Daylight Time. The Standard & Poor's 500 index dropped four points, or 0.2 percent, to 1,629.

So far, markets have defied expectations for a slowdown heading into the summer.

The Standard & Poor's 500 index has started the second quarter well, gaining 1.9 percent so far in the period. But the index has declined in the second quarter in each of the past three years. Stocks slumped as Europe's debt crisis intensified last year and in 2011 they dipped as wrangling in Washington pushed the U.S. to the brink of default.

"The market has had a phenomenal run," said Ron Florance, managing director of investment strategy at Wells Fargo Private Bank. "We'll have to see how the second quarter plays out."

In government bond trading, the yield on the 10-year note continued to edge higher, climbing to 1.81 percent from 1.77 percent on Wednesday. The yield, which moves inversely to the bond's price, has risen from 1.63 early Friday before a surprisingly strong employment report.

Specialists Devin Cryan, left, and  Gabriel Freytes wear a Specialists Devin Cryan, left, and Gabriel Freytes wear a "Dow 15,000" hats as they work at a post on the floor of the New York Stock Exchange Friday, May 3, 2013. A big gain in the job market is lifting the stock market to a record high. The Dow Jones industrial average crossed 15,000 for the first time, and the Standard and Poor's 500 index, a broader market measure, rose above 1,600.(AP Photo/Richard Drew) (Associated Press)

The price of crude oil fell 85 cents, or 0.9 percent, $95.74 and gold fell $7.50, or 0.5 percent, to $1,466.20. The dollar edged higher against the euro and the yen.

In other stock trading, the Nasdaq composite index, which his heavily weighted with technology stocks, was up one point at 3,414.

Barnes & Noble surged $2.89, or 16 percent, to $20.69 after TechCrunch reported that Microsoft was considering acquiring the book retailer's digital book venture Nook Media for $1 billion.

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