Stock slump suggests rally fizzling

Specialist Christian Sanfilippo, left, and trader Doreen Mogavero

Specialist Christian Sanfilippo, left, and trader Doreen Mogavero work on the floor of the New York Stock Exchange on Wednesday. (Feb. 6, 2013) (Credit: AP )

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Stocks slumped Thursday, suggesting that the rally which has pushed indexes close to record levels may have run its course.

At the close on Wall Street, the Dow Jones industrial average was down 42.47 points at 13,944.05. The Standard & Poor's 500 index closed down 0.18 percent at 1,509.39, and the Nasdaq composite dropped 0.11 percent to 3,165.13.

"We had such a big January, some type of weakness, or consolidation, makes sense here to us," said Ryan Detrick of Schaeffer's Investment Research in Cincinnati.

The Dow has shed almost 1 percent since the start of the week, after logging its best January in almost two decades. The S&P 500 has lost an average of 0.58 percent in February over the last 20 years, making it the weakest month for stocks, according to research by Schaeffer's.

News Corp. closed down 79 cents at $27.90 after the media conglomerate cut its forecast for annual earnings. The company said weakness at several businesses, including its Fox broadcast network, would offset a gain in earnings in the most recent quarter.

Stocks fell even after a report showed that applications for unemployment benefits had declined.

Fewer Americans sought unemployment benefits last week, a sign that layoffs are easing. Applications for unemployment benefits fell 5,000 to 366,000. Worker productivity also shrank in the final three months of 2012, although the decline was caused by temporary factors.

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