Stocks ended down but off their lows on Wednesday after Salomon Smith Barney's downgrade of software giant Microsoft (MSFT), a technology bellwether, dampened sentiment.
The losses were kept in check by better-than-expected economic data that suggested the economy may be improving. Initial jobless claims fell in the week ended Nov. 17 and the final reading for the University of Michigan's November consumer sentiment came in better than the preliminary level.
Trading volume, meanwhile, was light ahead of the Thanksgiving holiday on Thursday. All markets are closed on Thursday, and reopen for a shortened session on Friday.
Salomon analyst Richard Gardner cut the firm's rating on Microsoft to neutral from outperform, saying the share price is too high in relation to underlying sales and earnings. Shares of Microsoft were down more than 2%.
In other news, troubled energy giant Enron Corp. (ENE) staggered 27% lower amid credit concerns and new doubts about its proposed takeover by Dynegy.
And on the IPO front, in a departure from the recent successful string of initial offerings, animal hospital operator VCA Antech (WOOF), ended more than 6% off its $10 offering price on its first day of public trading.
The Dow Jones industrial average lost 66.84 points, or 0.68%, to 9,834.54. The Nasdaq composite index was off 5.61 points, or 0.30%, to 1,874.90. The broader Standard & Poor's 500 index slipped 5.66 points, or 0.50%, to 1,137.00.
U.S Treasuries continued their losing streak in a holiday-shortened session marked by light volume. Treasuries were hit hard again in the wake of stronger than expected jobless claims data. But the market managed to trim intraday losses.
Initial jobless claims fell to 427,000 in the week ended Nov. 17, a period shortened by the Veterans Day holiday, the Labor Department said. The number was down from a marginally revised 442,000 the prior week. It was also the lowest since 393,000 in the Sept. 15 week.
In other economic news, the final reading for the University of Michigan's November consumer sentiment came in at 83.9, better than the preliminary level of 83.5 and October's 82.7. Standard & Poor's MMS notes that overall, sentiment has firmed up in recent weeks -- but it is still is barely above the September low point of 81.8, which implies that the ongoing weakness in the economy and deteriorating conditions in the labor market are capping consumer optimism.
European markets ended mixed. In London, the Financial Times-Stock Exchange 100 index was up 15.10 points, or 0.28%, to 5,313.80. In France, the CAC 40 was down 36.49 points, or 0.79%, to 4,557.03. In Germany, the DAX Index was off 9.15 points, or 0.18%, to 5,087.03.
In Asia, the markets finished mixed. The Nikkei added 85.46 points, or 0.81%, to 10,661.08. In Hong Kong, the market shed 51.87 points, or 0.46%, to 11,173.92.