Stocks erase gains as optimism over jobless claims fades

An early rally on Thursday sparked by a positive employment report faded as the session progressed.

The Dow Jones Industrial Average fell for the fourth consecutive session, down 18.58 points to 13,326.39. The Nasdaq Composite Index was down 2.37 points to 3,049.41, and the S&P 500 Stock Index rose 0.28 point to 1,432.84.

The Department of Labor reported initial claims for jobless benefits fell 30,000 in the week ending Oct. 6 to 339,000, the lowest level since February 2008. The number was well above expectations.

Commodity prices traded higher on Thursday. Gold rose $5.50 to $1,770.60 an ounce, and oil was up 82 cents to $92.07 a barrel despite a report that oil inventories rose in the past week.

The Standard & Poor’s 500 Index pared an advance of 0.8 percent as Apple Inc. (Nasdaq: AAPL) extended its retreat from a September record to more than 10 percent. Bank of America Corp. (NYSE: BAC) and Morgan Stanley (NYSE: MS) advanced at least 1.4 percent as energy and financial stocks posted the biggest rallies out of 10 groups in the S&P 500. Sprint Nextel Corp. (NYSE: S) jumped 14 percent as it said it’s in talks with Japan’s Softbank Corp. about a potential transaction.

“Weakness in Apple continues to be watched, and traders are eyeing the S&P 50-day moving average as we slowly slip back toward that level,” said Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., in an email. His firm oversees $250 billion in assets.

The S&P 500 has slipped 2.3 percent since reaching an almost five-year high of 1,465.77 on Sept. 14. The benchmark index is less than 1 percent higher than its 50-day moving average of 1,427.11. Apple sank 2 percent to $628.10, erasing an earlier rally of as much as 1 percent and helping to reverse gains for technology companies as a group in the S&P 500. The iPhone maker is down 11 percent since reaching its all-time high of $702.10 on Sept. 19.

European equities climbed earlier as Italy sold 3.75 billion euros ($4.8 billion) of its benchmark three-year bonds at 2.86 percent. Investors bid for 1.67 times the amount offered, up from 1.49 times last month. S&P on Wednesday cut Spain’s debt rating to one level above junk, citing economic and political risks as the government considers a second bailout.

The European Union may push back the deadline for applying tougher bank-capital rules for as long as a year, after warnings from lenders that pressing ahead with the original timetable may drive up their costs, according to three people familiar with the talks.

Bank of America gained 1.4 percent to $9.34. Morgan Stanley rose 2.6 percent to $17.86. JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) are scheduled to report quarterly earnings Friday. Analysts forecast Wells Fargo, the largest U.S. home lender, will post record profit. The company slid 0.1 percent to $35.18. JPMorgan gained 0.8 percent to $42.10.

Fastenal Co. (Nasdaq: FAST) jumped 8.4 percent to $45.89. The company reported that sales in the third quarter were $802.6 million, exceeding the average analyst estimate of $801.4 million. Daily sales growth in September was 13 percent, up from 12 percent in the prior month.

Oshkosh Corp. (NYSE: OSK) soared 11 percent to $29.90 after billionaire activist investor Carl Icahn offered to buy the U.S. military’s biggest supplier of blast-resistant trucks for $32.50 a share. Icahn is the largest shareholder of the Wisconsin-based company, according to Bloomberg data. Navistar International Corp. (NYSE: NAV), another truckmaker in which Icahn is the third-largest holder, also rose, increasing 2.8 percent to $22.61.