Stocks cut losses as Boeing provides smiles

NEW YORK -- Stocks pared losses and the Dow Jones industrial average turned positive in afternoon trading Thursday as plane maker Boeing rose after it said it expects the first flight of its long-delayed 787 Dreamliner by the end of 2009 and as oil prices cut losses.

Investors ignored reports on unemployment and gross domestic product that showed the nation's economy appears to be stabilizing.

The Labor Department said first-time unemployment claims fell 10,000 to a seasonally adjusted 570,000. Though jobless claims declined, it was just shy of economists expectations for 565,000.

A Commerce Department report showed the nation's economy shrank at a 1% annualized rate in the second quarter. The updated figure was unchanged from a preliminary reading on the nation's GDP, which measures the value of all goods and services produced within the U.S.

Economists had been predicting the figure would be revised lower to a 1.5% decline.

Overseas, Asian stocks fell after China said it would cut excessive investment in some industries, while European stocks were mixed.

Elsewhere in corporate news, luxury homebuilder Toll Brotherstol said it lost $472.3 million in its fiscal third quarter due to a tax-related allowance and a write-down. Toll Brothers would have been profitable had it not been for the charges. The company has said there are signs of improvements in some markets.

On Wednesday, the Dow rose just 4 points, while the S&P and Nasdaq eked out gains of less than 1 point despite further signs the economy might be on the mend — a sign the market rally might be losing steam. The Commerce Department reported that new-home sales rose 9.6% in July for the fourth straight monthly increase. The department also said factory orders for goods expected to last at least three years rose 4.9% in July, the biggest jump in two years and easily eclipsing economists' expectations.

During a rally that has sent stocks up by more than 45% since March, traders have typically welcomed better-than-expected economic reports by buying heavily in the market. That was not the case Wednesday.

The dollar mostly fell against other major currencies, while gold prices rose.

Overseas, Japan's Nikkei stock average fell 1.6%. In afternoon trading, Britain's FTSE 100 rose 0.2%, Germany's DAX index fell 0.2%, and France's CAC-40 rose 0.3%.