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Stocks flip between gains and losses; Cisco climbs

Matthew Craft, AP Business Writer

FILE - Specialist Bradley Kessler, left, works with traders on the floor of the New York Stock Exchange in this May 7, 2013 file photo. Financial markets were subdued Thursday May 16, 2013 despite encouraging growth figures out of Japan, as investors paused for breath a day after the main U.S. stock indexes struck record highs. (AP Photo/Richard Drew, File)

NEW YORK (AP) -- Cisco Systems led the Dow Jones industrial average slightly higher Thursday after the technology company reported higher sales. Mixed corporate earnings and economic reports kept the major stock indexes flipping between slight gains and losses.

Shortly after noon, the Dow was up 12 points at 15,288. The Standard & Poor's 500 index was up less than a point at 1,659.

The news on the economy Thursday wasn't encouraging. Applications for unemployment benefits rose last week, and manufacturing slowed in the mid-Atlantic region. The manufacturing report from the Philadelphia branch of the Federal Reserve sent bond prices up in morning trading and turned stocks lower, but not for long.

"We've been seeing a lot of that this year," said Scott King, an investment adviser at Unified Trust Co. in Lexington, Ky. "The news isn't great, yet the market holds tight."

Cisco jumped 13 percent, or $2.68, to $23.87. Cisco turned in quarterly results late Wednesday that beat analysts' expectations, with the help of better revenue from the U.S. and emerging markets.

The networking equipment company sells its routers, switches, software and services to corporate customers and government agencies around the world. As a result, Cisco's performance is often considered a gauge of how the technology industry is doing.

The Nasdaq rose 8 points to 3,479, a gain of 0.2 percent.

Wal-Mart fell 2 percent, the biggest drop among the 30 Dow stocks. The world's largest retailer turned in weaker sales and a dim forecast for profits. The company blamed bad weather and delayed tax refunds for earnings and sales that fell short of what analysts had expected. Wal-Mart's stock lost $1.68 to $78.11.

Companies have reported record quarterly profits this earnings season. Seven of every 10 in the S&P 500 have trumped analysts' earnings estimates, according to S&P Capital IQ. Earnings have climbed 5 percent over the year before.

But revenue has looked weak: six out of every 10 companies in the S&P 500 have missed forecasts, and revenue has edged up just 1 percent. Without higher sales, companies are getting more of their profits from laying off staff and other cost-cutting moves.

If the market is going to keep climbing this year, King said, sales will have to start rising. Analysts are looking for that to happen as economic growth gains strength later this year.

"It's hard to see how companies can squeeze more earnings growth out of cost savings," King said. "At some point, the economic numbers and revenue have to pick up."

The Philadelphia branch of the Federal Reserve reported that manufacturers in the region said business conditions have slumped this month. Orders for manufactured goods and shipments have been weak.

In Washington, the Labor Department reported that the number of Americans seeking unemployment benefits rose last week to 360,000. That suggests companies are laying more people off, just one week after applications for benefits hit a five-year low.

The yield on the 10-year Treasury note sank to 1.88 percent from 1.94 percent late Wednesday. It's a sign that traders are shifting money into low-risk investments like U.S. government debt.