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Stocks Retreat as Materials Fall, Utilities Rise

Stocks were mixed Thursday as the Dow retreated from the 11,000 mark, a level the blue-chip index hasn't reached since May.

The Dow Jones Industrial Average fell about 30 points. Soon after the opening bell, the Dow had risen to as high as 10,998.

AT&T and Caterpillar fell, while Pfizer and General Electric rose.

The last time the Dow reached 11,000 was on May 4. The highest close for the blue-chip index this year was 11,205.03, reached on April 26. The Dow closed above 11,000 15 times in April and early May.

The S&P 500 fell slightly while the Nasdaq rose. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 21.

Health care, technology and utilities sectors rose, while telecom and materials fell.

The decline in materials stocks, as well as commodities and industrials, came after the dollarbegan to rise modestly this morning.

"Given that bounce, you’re seeing some profit taking in what has been a large move in commodities over the past few weeks," said Michael Sheldon, chief market strategist at RDM Financial Group. "It's a little give back in what looks like a multi-month trend in a lower dollar, higher commodities."

Sheldon added the stock market is unlikely to post any big moves ahead of Friday's report on September nonfarm payrolls.

"Technically the market has set itself up pretty well for further gains heading into the fall, however, economic fundamentals remain very mixed and it’s hard to get too exicted for growth looking out over the next several quarters."

Retail chain store sales beat their individual estimates, a positive sign that shows the consumer was buying despite waning confidence and higher savings rates. Retail sales rose 2.8 percent in September, thanks to strong back-to-school buying, beating estimates of a 2.1 percent gain, according to Thomson Reuters.

Positive results have been released so far from Limited Brands , Zumiez , and Abercrombie & Fitch, which soared to lead the S&P 500. More disappointing figures came from Target , BJ'sWholesale and Gap .

Viacom shares were slighlty lower despite a ratings upgrade to "buy" from Goldman Sachs, which also added the entertainment company to its "conviction buy" list. Goldman also raised Viacom's price target to $45 from $41, and said the company's advertising growth should continue to grow over the next three equarters.

Earnings season kicks off unofficially after the bell on Thursday when Alcoa releases results.

Earnings releases, however, also took place this morning. PepsiCo shares fell after the company lowered the top end of its guidancefor the fiscal year because of changes in currency rates. Marriott shares sank despite a boost in the hotel chain's revenues as analysts focused on the slow growth in the sector. Meanwhile, Goldman Sachs issued a report recommending Hyatt , Starwood and Marriott as a "buy," saying recovery in the lodging sector will continue.

In the technology sector, Goldman recommended buying Akami and VMware on weakness. Both companies are in the cloud computing industry, which was dragged down on Wednesday after Equinix, a company in this sector, said it had to lower prices.

Nokia shares rose after news that wireless company LightSquared would build mobile devices for the company's fourth-generation network. Qualcomm would supply the chips.

Also, Hewlett-Packard was up slightly after announcing late Wednesday that it would introduce smartphones in 2011 using software acquired from its acquisition of Palm. Also on Wednesday, the Wall Street Journal reported Apple will make a version of the iPhone that can be used by Verizon.

Meanwhile, BMC Software shares soared more than 8 percent after rumors that the software company may be exploring a sale.

MEMC Electronic Materials got a boost Thursday after Wunderlich Securities raised the rating on the semiconductor equipment maker to "hold" from "sell," citing the likelihood the company will have more sales to solar farms, and news that JPMorgan Capital is financing the development of solar farms for a MEMC subsidiary.

And Check Point Software rose after UBS initiated coverage of the information technology security company as a "buy." Check Point's new Blade Architecture "positions the company as a broader security platform vendor," UBS said.

In economic news, jobless claims fell by 11,000 to 445,000, the lowest level in three months, for the week ended Oct. 2, below the critical level of 450,000. That's better than a Briefing.com poll, which said first-time claims for jobless benefits would fall to 450,000 new claims, down from the revised 456,000.

The big jobs news is due Friday with the release of nonfarm payrolls news by the U.S. Labor Department.

A report on consumer credit is released at 1 p.m. A concensus by Briefing.com estimates consumer credit will drop by 3.0 in August. The Federal Reserve releases new figures on total outstanding credit at 3 p.m.

Earlier in Europe, the European Central Bank’s left interest-rate unchanged at 1 percent. TheBank of England also left rates unchanged on Thursday.

European stocks were flat in early trade on Thursday and the dollar hit a 15-year low against the yen on growing speculation that the Federal Reserve may buy assets to boost the economyas early as next month.

On Tap This Week:
THURSDAY: Monthly chain store sales; Kansas City Fed Pres Hoenig speaks; Consumer credit; Mosaic shareholder meeting; Earnings from PepsiCo and Alcoa
FRIDAY: Monthly non-farm payroll; Wholesale trade; NY Comic Con; IMF, World Bank annual meetings

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