Stocks Rise Before Jobs Data
08/03/06 - 04:39 PM EDT
Robert Holmes
Updated from 4:14 p.m. EDT
Stocks had a sluggish start but closed higher Thursday as investors bet that recent job growth has been slow enough to convince the Federal Reserve to suspend its rate-hiking campaign. The Dow Jones Industrial Average, having been down as many as 55 points earlier, finished up 42.66 points, or 0.38%, to 11,242.59, aided by a 2.8% rise in component Caterpillar(CAT Quote - Cramer on CAT - Stock Picks). The S&P 500 was up 1.72 points, or 0.13%, at 1280.27, and the Nasdaq Composite was higher by 13.53 points, or 0.65%, to 2092.34. Like the Dow, both reversed earlier losses. "Indications are that the market is starting to discount the end [of rate increases]," said Barry Hyman, equity market strategist with EKN Financial. "While we've rallied in the past on the belief of hikes being over, today we see sectors giving credence to that belief." For example, the Philadelphia Housing Sector Index added 3.2%, the Nasdaq Transportation Index ended higher by 3%, and the Dow Jones Transportation Average gained 2.6%. About 1.81 billion shares changed hands on the New York Stock Exchange, with advancers beating decliners by a 5-to-3 margin. Volume on the Nasdaq was 1.84 billion shares, and winners edged losers 3 to 2. Even before trading began, investors had to contend with the monthly crush of chain-store sales and a number of corporate earnings reports. On the Nasdaq, a gain of 1.5% on the Philadelphia Semiconductor Sector Index helped overcome an 8% decline in Starbucks (SBUX Quote - Cramer on SBUX - Stock Picks), which fell after posting disappointing same-store sales growth late Wednesday. A day ahead of the government's July employment report, the Labor Department said initial jobless claims rose by 14,000 to 315,000 last week. Elsewhere, the Commerce Department said U.S. factory orders rose 1.2% in June, falling short of economists' expectations. Excluding transportation orders, which jumped 7.4%, factory orders were up just 0.1%. In addition, the Institute for Supply Management said its services index dropped to a reading of 54.8 in July from 57.0 the previous month. Economists had expected the index to dip slightly to 56.9. Though the economic data are always closely monitored by Wall Street, this week's numbers have a bit more significance because they come in front of a Fed policymaking meeting on Aug. 8. Even with the meeting only five days away, analysts haven't formed a consensus opinion as to whether the central bank will again raise its fed funds target rate or leave it unchanged at 5.25%. "A weaker number would be good for the market, because that would signal the possibility of a Fed pause next week," said Paul Mendelsohn, chief investment officer with Windham Financial. Economists currently expect that nearly 150,000 jobs were added to U.S. payrolls last month and that the unemployment rate held steady at 4.6%. Following the release of the day's economic numbers, the 10-year Treasury was up 3/32 in price to yield 4.95%, and the dollar fell against the euro and yen. Oil retreated as Tropical Storm Chris weakened in the Caribbean. Meteorologists had expected the storm to become a hurricane, but now the National Hurricane Center has lifted hurricane warnings for the Bahamas. In Nymex floor trading, September crude fell 35 cents to finish at $75.46 a barrel. The first Thursday of the month brought retail sales. Wal-Mart(WMT Quote - Cramer on WMT - Stock Picks) said same-store sales rose 2.4% in July, and total revenue jumped 12.5% to $25.66 billion. The world's largest retailer said it expects same-stores sales growth between 1% and 3% for August. Shares of Wal-Mart ended the session up 36 cents, or 0.8%, to $44.73. Among other chains, warehouse retailer Costco Wholesale (COST Quote - Cramer on COST - Stock Picks) said July same-store climbed 7%. Total sales climbed 11% to $4.48 billion. Others with rising sales included Federated(FD Quote - Cramer on FD - Stock Picks), Jos. A. Bank Clothiers(JOSB Quote - Cramer on JOSB - Stock Picks) and Limited Brands(LTD Quote - Cramer on LTD - Stock Picks). To view Gregg Greenberg's video take on today's market, click here.
RSS
