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Stocks weighed down by earnings reports

NEW YORK, July 29 (UPI) -- U.S. markets turned lower Thursday despite a Department of Labor report that said 11,000 fewer first-time jobless claims were filed last week.

The department said 457,000 initial benefits claims were filed in the week ending July 24.

Corporate earnings reports were mixed. Exxon said its profits surged 91 percent in the second quarter compared with the same period a year ago. Royal Dutch Shell profits rose 15 percent, while Sony Corp. said revenue rose 3.8 percent.

Several technology firms, including LSI, Akami Technologies, Nvidia and Symantec found their shares lower after submitting disappointing quarterly results.

By close, the Dow Jones industrial average shed 30.72 points or 0.29 percent to 10,467.16. The Standard & Poor's 500 index fell 4.60 or 0.42 percent to 1,101.53. The Nasdaq composite index dropped 12.87 or 0.57 percent to 2,251.69.

On the New York Stock Exchange, 1,591 stocks advanced and 1,423 declined on a volume of 5.3 billion shares traded.

The benchmark 10-year U.S. treasury note rose 1/32 to yield 2.992 percent.

The euro rose to $1.3074 from Wednesday's $1.2986. Against the yen, the dollar fell to 86.79 yen from Wednesday's 87.46 yen.

In Tokyo, the Nikkei 225 index fell 0.59 percent, 57.25, to 9,696.02. Component Intel slid 1.59 percent.

In London, the FTSE 100 index lost 0.11 percent, 5.73, to 5,313.95.

Partisan squall sinks small-business bill

WASHINGTON, July 29 (UPI) -- Partisan bickering surrounded and sunk a $42 billion bill meant to help small businesses as U.S. senators rejected the measure by sticking to party lines.

The Senate turned down the bill with a procedural vote that would have put it up for a floor debate, The New York Times reported Thursday.

The 58-42 vote included Senate Majority Leader Harry Reid voting no as a method of using Senate rules to preserve a chance to bring it up for another vote.

The bickering centered around a Republican effort to tack on more than three amendments to the bill, with Democrats seeking to limit amendments they said had nothing to do with the effort to help small businesses.

"The majority leader has graciously given us three amendments and what I'm saying is three amendments is not enough," said Sen. Mitch McConnell, R-Ky., the minority leader.

The bill included $30 billion in lending programs that would have been managed by the U.S. Treasury and $12 billion in tax breaks. Senate Republicans helped write the bill, which became bogged down in the peripheral argument over how many amendments would be included.

Sen. George LeMieux, R-Fla., said the bill was "good for the country" but voted against it.

The bill received support from the National Federation of Independent Business and the U.S. Chamber of Commerce, groups traditionally in the Republicans' corner. The NFIB said it was for the bill, but for additional amendments, also.

Fed policymaker Bullard warns of deflation

ST. LOUIS, July 29 (UPI) -- Federal Bank of St. Louis President James Bullard warned Thursday that the U.S. economy could be headed toward a sluggish period marked by falling prices.

Deflation can set the economy on a prolonged downward spiral, as it leads to smaller profits for companies, which leads to layoffs. In addition, consumers put off spending, as prices could improve if they wait. That further disables the economy.

In an executive summary of Bullard's manuscript, "Seven Faces of 'The Peril,'" the St. Louis Fed branch said, "the Federal Open Market Committee's extended period language may be increasing the probability of a Japanese-style deflationary outcome for the United States within the next several years."

The Federal Reserve has consistently issued statements to the effect that it would keep its monetary policy at historically low levels for "an extended period." The bank-to-bank lending rate is currently set at zero to 0.25 percent.

Japan from 1981 through 1991 suffered through an economy-stalling deflationary period.

Bullard, who is on the FOMC, warned that low interest rates could prompt deflation. Further, "Promising to remain at zero for a long time is a double-edged sword," the summary explained.

"This policy is consistent with the idea that inflation and inflation expectations should rise in response to the promise and that this will eventually lead the economy back toward the targeted equilibrium," the statement said.

On the other hand, "It is also consistent with the idea that inflation and inflation expectations will instead fall," Bullard argues.

Summer classics signal a shift at GM

WARREN, Mich., July 29 (UPI) -- Classic Camaros, Pontiac Trans Ams and Corvettes took center stage at General Motors Thursday, as a sign of recovery for the U.S. automaker.

GM reinstated an annual summer ritual of inviting workers to bring in their classic cars and put them on display at the Warren Tech Center in Warren, Mich., the Detroit Free Press reported.

The annual day of company pride was canceled a year ago, when GM was in the midst of a bankruptcy proceeding.

Employee and 1968 Chevy Chevelle owner Tom Hipple said, "We're as good as or better than the imports."

Tom Stephens, vice chairman of global product operations, said, "They don't write songs about washing machines and Apple computers. We're trying to get that pride back into the organization.

"I try to get myself out of the building and in the seat of a car as often as possible," he said.

The newspaper said nearly 700 classic GM cars were put on display.

A year away from bankruptcy, although pared down considerably, GM posted a profit of $865 million in the first quarter and is expected to be in the black for the second quarter as well.