U.S. Stocks Revert To Losses; Sears Reports Profit Plunge

NEW YORK (MarketWatch) -- U.S. stocks on Thursday resumed early declines, capping the market's biggest jump up in five years, as rising oil prices and mostly bearish economic news overshadowed thinking of another interest-rate cut ahead.

"It doesn't take much good news to move up, and unfortunately it doesn't take much to move it back down," said Art Hogan, chief market strategist at Jefferies & Co.

Up and down throughout the day, the Dow Jones Industrial Average more recently fell 21.2 points, or 0.2%, to 13,268.2.

The S&P 500 Index declined 4.93 points to 1,464.09, while the Nasdaq Composite Index edged down 7.75 points to 2,655.16

"After [Wednesday's] surge, there will likely be some minor profit-taking during the course of the day; [the rising price of] oil is going to restrain further upward movements," said Peter Cardillo, chief market economist at Avalon Partners.

"The market is going to be data-dependent and most likely hold onto a good portion of [Wednesday's] gains," added Cardillo, who cited E-Trade Financial Corp.'s infusion of capital and a stronger dollar as positives for the equities market.

Wall Street's "primary trend is now bearish," said Chuck Carlson, chief executive at Horizon Investment Services. .

Stock indexes had pulled lower under the weight of rising oil prices and a 99% profit drop at Sears Holdings Corp., and then declined further after the Commerce Department said that builders cut prices the most in 26 years in October, boosting sales of new homes. Sales rose 1.7% to a seasonally adjusted annual rate of 728,000 in October from a downwardly revised 716,000 in September, an 11-year low. .

Earlier data also had the government reporting a rise in weekly jobless claims to near two-year highs, along with an upward revision in third-quarter U.S. economic growth to 4.9%. .

Shares of Sears were off 14% after dropping to a low of $98.25 earlier on, its lowest level since it dipped to $97.35 in March 2005. The retailer offered disappointing results and said that it doesn't anticipate any near-term improvement.

Shares of other retailers fell as well, with the S&P Retail Index sliding 1.1%.

Fed speak

On Wednesday, U.S. stocks surged for another day, with the Dow tallying its biggest two-day gain since 2002, as investors cheered Federal Reserve talk seen as signaling a further interest-rate cut next month.

More central-bank talk was expected after Thursday's close, with Fed Gov. Frederic Mishkin and Fed Chairman Ben Bernanke slated to speak.

Crude futures rallied as much as $4 a barrel after a fire crippled a key pipeline bringing Canadian oil into the United States, operated by Canada's Enbridge Inc.

On the New York Mercantile Exchange, crude futures were recently up 10 cents at $90.72 a barrel

The dollar pulled higher against the euro, with the dollar index, which measures the greenback against a basket of six major currencies, at 75.535, up from 75.185 late Wednesday.

Active issues

H.J. Heinz Co. reported a better than forecast 19% profit rise.

Brown-Forman Corp. , the maker of Jack Daniel's and Southern Comfort, on Wednesday night announced a $200 million stock buyback and also narrowed its earnings forecast.

After the close of trading, Dell Inc. will report quarterly results.

General Motors Corp. rose 1.1% after it was upgraded to peer perform from underperform at Bear Stearns.

Stake buying was the theme in financials, as private-equity firm Citadel will swap $2.5 billion to increase its stake in E-Trade Financial to nearly 20%, and China's Ping An Insurance invested $2.7 billion in Belgian-Dutch group Fortis.

E-Trade shares surged 11%.

Men's Wearhouse Inc. forecast earnings below analysts' estimates, while TiVo Inc. narrowed its third-quarter loss.

In overseas trading, the Nikkei 225 climbed 2.4% follwing the Wall Street rally, while the FTSE 100 traded flat. .

By Kate Gibson