- Associated Press - Thursday, June 6, 2013

NEW YORK (AP) — The stock market bounced around Thursday as traders reacted to news from Europe and looked ahead to the government’s monthly employment report.

Stocks indexes dropped at midday, then recovered to about break even in afternoon trading. At lunchtime they followed European markets lower after European Central Bank President Mario Draghi signaled that the bank wouldn’t take more steps to shore up Europe’s ailing economy. The dollar sank against the euro and the yen, leading to price swings in other markets.

A drop in claims for unemployment benefits helped nudge the market up in morning trading, but the gains quickly faded. Traders said markets were likely to take sudden swings as they positioned for the government’s monthly employment report on Friday.

SEE ALSO: Unemployment-benefit applications fall to 346,000

The Dow Jones industrial average edged up 13 points to 14,974, or 0.1 percent, as of 2:56 p.m. EDT. It had been down as much as 116 points in the early afternoon.

Financial markets have turned volatile over the past two weeks as traders parse comments from Federal Reserve officials and economic reports for hints about when the bank will cut back on its support for the economy.

The Dow is coming off two days of losses. The index has managed to go without a losing streak of three days or greater since Dec. 28, a record 108 trading days, according to Schaeffer’s Investment Research.

A batch of weak economic reports sent the stock market plunging to its lowest level in a month on Wednesday. The Dow had its biggest one-day loss in seven weeks and closed below 15,000 for the first time since May 6.

One change traders are reacting to is a recent increase in long-term interest rates. Those rates likely will climb further as the economy improves and the Fed scales down its monthly purchases of $85 billion in bonds. Rates remain near historically low levels.

“As interest rates come back to more normal levels, it’s probably going to cause volatility,” said Tim Speiss, chairman of the personal wealth advisers practice at EisnerAmper. “But that should be viewed as healthy.”

In the market for U.S. government bonds, the yield on the 10-year Treasury note edged down to 2.07 percent from 2.09 percent late Wednesday.

The yield, which is a benchmark for many kinds of loans, including home mortgages, has been rising steadily from a recent low of 1.63 percent since May 3, when the government reported a surge in hiring over the previous three months. Expectations that the Fed will ease back on its bond purchases sometime soon also is prompting investors to sell bonds, pushing yields higher.

In other U.S. stock trading, the Standard & Poor’s 500 index rose four points to 1,613, an increase of 0.3 percent. The Nasdaq composite rose four points to 3,406, or 0.1 percent.

In Europe, government bond yields rose and stock indexes fell after Mr. Draghi said the central bank wouldn’t take more action to prop up the region’s economy.

The yield on Spain’s 10-year government bond spiked to 4.65 percent from 4.41 percent as demand for the bonds dropped. Stock markets fell 2.6 percent in Italy, 1.2 percent in Germany and 1 percent in France.

Gold rose $17.30 to $1,415.80 an ounce. The price of crude oil crossed above $95 per barrel following a report from the U.S. Energy Department that the country’s oil supply shrank last week. Oil settled up $1.02 to $94.76 a barrel.

Story Continues →