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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Uncertainties cause fluctuations

Tim Paradis Associated Press

NEW YORK – The stock market eked out a gain Friday as investors took downbeat economic news in stride.

The modest gains still left stocks with a loss for the week but the Dow Jones industrial average and the Standard & Poor’s 500 index logged their best month since November.

The latest bad news came from several corners including the financial industry. Insurer American International Group Inc. reported a larger than expected fourth-quarter loss. The company said its primary insurance business was hurt in part by the economy.

The National Association of Realtors said sales of previously occupied homes fell 7.2 percent in January, the second straight big drop. Analysts had predicted a gain. The Realtors’ report comes two days after the Commerce Department said that new home sales fell last month.

Meanwhile, the Commerce Department reported that the nation’s economy grew at a faster pace than initially estimated for the end of 2009. The stronger growth from the third quarter to the fourth quarter was welcome news, but analysts say much of the gain is tied to businesses rebuilding inventories. Growth is expected to slow in the coming quarters.

The mixed reports added to investors’ confusion about the economy. Analysts are divided over whether a recovery is on track. That has led to swings in the stock market after nearly a year of huge gains. Major stock indexes were strong in February but are down about 1 percent for the year. This week, stocks have fallen, jumped and slid again as worries about the economy intensified and eased.

“We’re in a time period where the range of potential outcomes is probably wider than it’s been for some time,” said Colleen Supran, a portfolio manager at Bingham, Osborn & Scarborough in San Francisco.

“Are we going to have a double dip? Are corporations going to be able to grow earnings? That’s sort of the bottom line for stock prices in the long run.”