Dow Pares Losses After Philly Fed Report

Stocks pared their losses Thursday after a third straight positive Philly Fed reading — the first time that's happened in two years.

The Philadelphia Federal Reserve reported its gauge of regional manufacturing slipped slightly — to 11.5 in October from 14.1 in November — but it was the third straight positive reading, the first time that's happened in two years.

In the day's other economic news, weekly jobless claims dropped to their lowest level since January; the consumer prices rose 2 percent, in line with expectations; and New York manufacturing rose unexpected in September.

Stocks had opened lower after two Wall Street giants posted earnings that on their surface beat expectations but fell short of investor demands for a real turnaround.

Goldman Sachs reported earnings of $5.25 a share — a full dollar above expectations — beating on both earnings and revenue.

But shares fell as Wall Street's whisper numbers got a little out of control following JPMorgan's beat yesterday.

Adding to the disappointment, Citigroup beat on earnings but didn't beat on revenue, which was weighed down by billions in failed loans.

Disappointment in both Goldman and Citi earnings rippled through the financial sector.

Banking analyst Dick Bove said this morning on CNBC that investors shouldn't be selling Goldman or Citigroup stock.

“I would argue that (Goldman’s earnings are) stronger than JPMorgan’s if you look at the whole company,” with JPMorgan doing badly on the traditional bank side of the business, Bove said. "There is no reason not to be buying (Goldman) at this time,” he said.

Bove said Goldman is the best-manged firm in the sector, but Citi's stock has the most growth potential — it could go up to $20, he said. The stock is currently just under $5.

Southwest Airlines reported a loss, attributing it to fuel hedges and an early retirement program, but revenue also declined.

Earnings reports after the closing bell will come from Google , IBM and Advanced Micro Devices.

In M&A news, Cisco's bid for videoconferencing firm Tandberg was snubbed by a large shareholder.

Outside financials, US-traded Nokia shares fell 9.7 percent premarket after the company surprised Wall Street by swinging to a quarterly loss. The company said it was hurt by sagging smartphone sales and writedowns at its networks unit.

And the market was disappointed with motorcycle company Harley-Davidson, which posted a smaller profit than expected.

Still to come: At 10:30 am ET, the Energy Department will be releasing its weekly report on natural gas inventories. The weekly oil inventory numbers — delayed a day by the Columbus Day holiday this week — will be out at 11 am.

Chipmaker Xilinx will be a stock to watch today, as it reported quarterly profit of 25 cents a share, three cents above analyst estimates.

One possible damper on the market mood could be the latest report from RealtyTrac, which says home foreclosures rose more than 5 percent during the third quarter. Almost 938,000 properties were affected during the July through September period, compared to 890,000 during the prior three months.

On a positive note for housing, the average on the 30-year fixed mortgage rate was 4.92 last week, the third straight week it's been below 5 percent, Freddie Mac reported.

Homeowners have taken advantage of the low rates: In the past five weeks, 3 out of 5 mortgages were for refinancing, according to the Mortgage Bankers Association.

— Peter Schacknow contributed to this report.

Still to Come:

THURSDAY: IRS amnesty for offshore accounts ends; CPI; Empire State manufacturing; weekly jobless claims; Philly Fed; weekly crude inventories; Earnings from Citigroup, Goldman Sachs, Nokia, IBM and AMD
FRIDAY: Industrial production; consumer sentiment; Fed's Fisher speaks; Earnings from Bank of America, GE, Halliburton and Mattel

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