Stocks Finish Higher on Strong U.S. Data

NEW YORK (TheStreet) -- The major U.S. indices finished about 1% higher Thursday on a set of strong domestic economic headlines.

The Dow Jones Industrial Average gained 123.1 points, or 1%, at 12,904, bouncing back from an almost 100-point drop the previous day, its worst session of the year. The S&P 500 rose 14.8 points, or 1.1%, at 1358. The Nasdaq added 44 points, or 1.5%, at 2960. All major sectors had been trading in the green, led by basic materials, consumer cyclical stocks and technology.

According to S&P Capital IQ, the S&P 500 was less than 1% away from eclipsing its 1363 recovery high as of Feb. 14, and could succeed in the coming weeks. However, says, Sam Stovall, chief equity strategist, S&P Capital IQ, "just as it takes several energetic attempts to open a rusty door," the index will need to backtrack a few paces before achieving the necessary momentum.

A spate of better-than-expected domestic data was lifting sentiment. The number of Americans seeking first-time unemployment benefits fell 13,000 to 348,000 in the week ended Feb. 11 from a revised 361,000 the previous week, according to a Labor Department report. Economists expected claims to rise to 365,000 from an originally reported 358,000.

"That today's [jobless] number was not only better than expected but much better than expected can only be received warmly, providing further evidence that at least on the firing side of things, the labor market is improving considerably," Dan Greenhaus, chief global strategist, BITG, said in a note. "If this trend continues, one would have to believe, given previous relationships, that the monthly employment report will begin printing 200,000 plus job additions on a regular basis."

Housing starts rose 1.5% to a seasonally adjusted 699,000 in January from a revised 689,000 in December, according to a Census Bureau report. Economists had expected starts to climb 2% to 670,000. Building permits rose 0.7% to 676,000 for the month. Single-family building permits rose 0.9% to 445,000 from a revised 441,000 in December.

"While we still do not expect housing to become an engine of growth for the U.S. economy anytime soon, there is every reason to believe that it has finally hit bottom," says Millan Mulrain, senior U.S. strategist at TD Securities.

The January producer price index rose 0.1%, after falling 0.1% in December. Core producer prices, excluding food and energy, rose 0.4% in January, the largest increase since July, following a rise of 0.3% in December.

The Federal Reserve Bank of Philadelphia said manufacturing activity in the region picked up in February. The bank's general activity index rose to a reading of 10.2 from 7.3 in January.

As market action heated up, James "Rev Shark" DePorre, founder and CEO of Shark Asset Management, said "even though the market is holding up well, the problem we encounter is that the dip-buyers are backing off and the sellers are showing more resolve, hitting the market harder when it spikes."

"Another important characteristic of the market to watch is its leadership," says Shark. "Apple (AAPL) has been leading the recent charge higher, and its sharp reversal Wednesday helped to create a major shift in the mood. There is good reason for that. According to SentimenTrader.com, when AAPL has reversed 1% after hitting new highs, the S&P 500 has declined an average of 5.2% at some point in the next month. Apple is truly a market leader." Apple shares closed above $500, after slipping below this milestone mark earlier in the day.

Stocks closed lower Wednesday as reports that Greece's creditors were delaying the country's bailout eclipsed news that China may provide financial support to the eurozone.

As a March 20 deadline for repaying its debt quickly approaches, Greece must convince its German-led European partners that it will carry out conditions necessary for receiving its second bailout package of €130 billion. The country urgently needs this and a €100-billion write-down on privately held sovereign debt to prevent a massive default that could rock the global financial markets.

European partners continue to express skepticism about Greece's ability to fulfill deal requirements as it had backpedaled on promises in the past. While Athens hopes that it can eradicate doubts by the next meeting of eurozone finance ministers on Monday, there have been suggestions of finding ways to hold off on the complete delivery of the bailout until after Greece's early elections in April, while at the same time avoiding a chaotic default.

Greek finance minister Evangelos Venizelos meanwhile indicated that a €325-million gap in Greece's budget this year can be plugged. Meanwhile, reports say that the European Central Bank is planning to swap Greek bonds for new one on the same terms so they wouldn't have to take any forced losses. It's estimated that the ECB owns about € 50 billion euros of Greek bonds.

The euro had earlier fallen to a three-week low against the dollar as talks dragged on, but has since rebounded as markets got a lift from U.S. data releases.

As the eurozone continues to fight its debt crisis, Moody's warns that it may cut the credit ratings of 17 global and 114 European financial institutions. The credit ratings of Morgan Stanley (MS), UBS (UBS) and Credit Suisse (CS) could be cut three notches by Moody's because of the risks associated with the eurozone debt crisis.

Germany's DAX closed down 0.09% while London's FTSE settled lower by 0.12%. Japan's Nikkei Average settled down 0.24% and Hong Kong's Hang Seng closed lower by 0.41%.

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In corporate news, General Motors (GM) missed fourth-quarter earnings estimates by a penny as it lost money in both Europe and South America. During the quarter, including items, the automaker earned $500 million, or 28 cents a share, including a net loss from special items of 11 cents. Excluding items, the company earned 40 cents a share. Analysts surveyed by Thomson Reuters had estimated 41 cents. Revenue rose 3% to $38 billion, in line with estimates. In North America, the automaker reported earnings before interest and taxes of $1.5 billion, up from $800 million in the same period a year earlier. In Asia, the company reported a gain of $400 million. But GM Europe lost $600 million and GM South America reported a loss of $200 million.

Still, the company booked the highest profits in the company's history for the full year. The auto giant made $7.6 billion in 2011, representing a 62% over 2010. Looking forward, GM said that 2012 will bring "continued pricing improvement with cost inflation well contained, while product mix and pension expense are expected to be unfavorable." Revenue is expected to grow. Shares increased 9% to $27.17.

Amazon (AMZN) shares tumbled 2.5% to $179.93 after Morgan Stanley downgraded the online retail giant to equal weight from overweight on worries about declining sales growth this year in part due to increasing digital competition from Apple.

J.M. Smucker (SJM) posted adjusted third-quarter profit of $1.22 a share, down from $1.27 a year earlier. Revenue rose 12% to $1.47 billion. Analysts were expecting profit of $1.41 a share on revenue of $1.54 billion. Shares dropped 8.4% to $71.60.

NetApp (NTAP), the data storage software company, posted in-line results for its fiscal third quarter and provided a fourth-quarter outlook that sits within analysts' ranges. NetApp reported non-GAAP profit of $216 million, or 58 cents a share, for quarter ended in January on revenue of $1.57 billion, matching analysts' estimates. For its fiscal fourth quarter ending in April, NetApp said it expects non-GAAP earnings of 60 cents to 65 cents a share on revenue ranging from $1.65 billion to $1.73 billion. Analysts forecast profit of 63 cents a share on revenue of $1.68 billion. Shares jumped 7.2% to $42.74.

DirecTV (DTV), the satellite TV company, said fourth-quarter profit rose 16% to $718 million, or $1.02 a share. Revenue rose 13% to $7.46 billion. DirecTV said it added a net 590,000 subscribers in December in Latin America. But U.S. subscriber additions fell to 125,000 from the 289,000 added last year. Analysts were expecting fourth-quarter earnings of 92 cents a share on revenue of $7.41 billion. Shares were down 2% to $45.38.

March oil futures settled up 51 cents to $102.31 a barrel. In other commodities, April gold futures closed up 30 cents at $1,728.40.

The dollar index was off 0.5% at $79.37 . The benchmark 10-year Treasury fell 17/32, raising the yield to 1.986%.

-- Written by Andrea Tse in New York.



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