Dow slips back from 32-month high

A day of soaring share prices in the US ended on a low note as caution returned despite healthy corporate profits and good economic news.

Earlier on Thursday, the blue-chip Dow Jones industrial average scaled a 32-month high.

European stocks had also leapt, with the UK FTSE 100 at a five-month peak.

But barely an hour before trading ended, investors were worrying that the euphoria had been overdone, and the Dow closed down 0.07%.

The Nasdaq Composite index, closely watched for its many tech stocks, had been the first to come off the boil, losing ground early in the afternoon and finishing down 1.47% at 2,045.96. And the broad S&P 500 index closed down 0.41% at 1,147.04.

Relief

The bullish start to the day had come both from healthy profits at key firms such as Wal-Mart and from encouraging news for the US economy.

With the US presidential election now just nine months away, the health of the economy is becoming a key issue.

The fact that job growth in what is meant to be a roaring recovery has been virtually non-existent is a particularly difficult subject for the White House.

So a 24,000 fall in new unemployment claims for the week ending 14 February will have been particularly welcome - even though the weekly totals are often dismissed as unreliable by economists and analysts.

Recovery

Still, together with the biggest acceleration since October in the leading economic indicators, a closely-watched sign of future industrial performance, they suggested to investors that things were getting better.

And the 8% rise in profits at Wal-Mart alongside good figures for several key tech firms was further reason to buy shares.

"The earnings seem to be very impressive so far," said Phil Flynn, vice president and senior market analyst at Alaron Trading Corp in New York.

The broader S&P 500 index was up 5.05 points or 0.44% at 1,156.87. But the tech-heavy Nasdaq Composite rose just 0.76 points or 0.04% to 2,077.23.

European gains

Outside the US, healthy results had had their effect as well.

In the UK, the blue-chip FTSE 100 index leapt 1.6% to 4,515.6, its best close since September 2003 following multi-billion pound profits for Royal Bank of Scotland.

And France's Cac 40 was at a 19-month high of 3,759.32, a gain of 1.4%.