A Banner Day for Stocks
Updated from 4:06 p.m. EST
Stocks posted their best gains since early December on Wednesday, boosted by a solid second quarter at
Micron Technology
(MU) - Get Report
, falling bond yields and lower oil prices. The upside move came a day after stocks fell near their 2005 lows.
The
Dow Jones Industrial Average
was up 135.23 points, or 1.3%, to 10,540.93, and the
S&P 500
was higher by 16.05 points, or 1.4%, to 1181.41, after both indices closed near their 2005 lows yesterday. The
Nasdaq
jumped 31.79 points, or 1.6%, to 2005.67, having closed at a new five-month low Tuesday.
Since hitting near four-year highs on March 4, the Dow has closed higher only five times, while the S&P 500 has gained ground in just seven of the last 17 sessions.
"You had a big push forward at the end of a day that had already started well," said Jay Suskind, head of institutional equity trading with Ryan Beck & Co. "Buyers came out of the woodwork after cash had been on the sidelines. However, this might be some window-dressing at the end of the first quarter. I think it was a reflex rally with good breadth, but you might see some profit-taking tomorrow ahead of Friday's employment number."
Trading volume on the
New York Stock Exchange
was 2.07 billion shares, with advancers beating decliners 3 to 1. Closing volume on the Nasdaq was 1.71 billion shares, with advancers outpacing decliners 7 to 3.
In other markets, the 10-year Treasury note was up 6/32 in price to yield 4.55%, while the dollar was higher against the yen and lower against the euro.
Oil fell after an inventory report that showed a 5.4 million-barrel build in crude stocks and a 2.9 million-barrel decline in gasoline stocks. Both were much more than expected. The May crude contract closed down 24 cents to $53.99 a barrel, well above the session low of $52.50.
On the economic front, the government said its final reading of gross domestic product in the fourth quarter was 3.8%, unchanged from the previous quarter. A key inflation barometer -- the core personal consumption expenditure price index -- increased at a 1.7% annualized rate, up from 1.6% previously.
Phillip Roth, chief technical market analyst with Miller Tabak & Co., says investors are focusing on the employment report due Friday morning. Economists expect nonfarm payrolls will show a gain of 220,000 jobs, after a larger-than-expected increase in January.
"On Friday, the employment number should be stronger, but it still remains to be seen how it will affect the market," said Roth. "A very strong number is bearish for bonds, while a weak number would be bullish. While it's clear for bonds, it is not clear how stocks will be affected. The market is in a short-term correction, and prices are what need to attract buyers."
Chipmaker Micron swung to a second-quarter profit of $118 million, or 17 cents a share, on sales of $1.3 billion, beating estimates on the top and bottom lines. The company cited higher DRAM shipments that reflected lower pricing and improved market share. The stock added 36 cents, or 3.6%, to finish at $10.48. Micron helped boost the Philadelphia Stock Exchange Semiconductor Index by 2.3%.
American International Group
(AIG) - Get Report
said Wednesday that a much-scrutinized 2000 transaction between it and
Berkshire Hathaway's
(BRKA)
General Re unit doesn't qualify as insurance and must be reclassified. The concession came in a press release announcing a one-month delay in the filing of AIG's 10-K with the
Securities and Exchange Commission
.
The nation's biggest insurer said it's making progress in an internal probe of various business dealings over the past decade. While it's too early to formalize the findings, AIG expects it will have to downwardly restate shareholder equity at Dec. 31 by 2%, or about $1.7 billion. Shares of AIG lost 91 cents, or 1.6%, to $57.29.
Elsewhere,
Hewlett-Packard
(HPQ) - Get Report
was raised to a buy from neutral Wednesday at First Albany. The brokerage cited optimism about new CEO Mark Hurd, who came over from
NCR
(NCR) - Get Report
on Tuesday. The stock, which added 10% in yesterday's session, finished trading at $22, up 22 cents, or 1%. Meanwhile, NCR gained $2.02, or 6.4%, to $33.42, after losing more than 17% Tuesday.
Steel stocks were volatile again Wednesday.
U.S. Steel
(X) - Get Report
rose 68 cents, or 1.4%, to $50.60.
Olympic Steel
(ZEUS) - Get Report
fell 65 cents, or 3.5%, to $17.97.
Schnitzer Steel
(SCHN) - Get Report
lost 17 cents, or 0.5%, to $33.20.
"There is a real battle going on between investors, played out in different economically sensitive markets," says Michael Sheldon, chief market strategist with Spencer Clarke. "Some investors are taking profits from these sectors, while others are looking for entry points in those same areas as they see strength into 2006. You will see a pickup in volatility in groups like steel through the rest of 2005. What effect higher interest rates have on the growth rate of the economy will certainly factor in as well."
Morgan Stanley
(MWD)
gained Wednesday after the announcement that the president and chief operating officer of its institutional securities group, Vikram Pandit, and the head of its institutional equity division, John Havens, have resigned amid increasing pressure and criticism by shareholders and former executives of the Wall Street company's management. Shares were up $1.67, or 3.1%, to close at $55.28.
CarMax
(KMX) - Get Report
reported a fourth-quarter profit increase of 32% to $29.7 million, or 28 cents a share, compared with $22.5 million, or 21 cents a share, a year earlier. Revenue rose 25% to $1.40 billion. Analysts expected EPS of 28 cents, according to Thomson First Call. Still, shares of CarMax lost $1.00, or 3%, to $32.20.
Walt Disney
(DIS) - Get Report
has severed ties with Harvey and Bob Weinstein, co-chairmen and founders of its Miramax Films unit, after more than a decade of working together. The Weinstein brothers will leave Disney after Sept. 30 to create a new company. While they will still use their Dimension film label, they will forfeit the Miramax label rights and upwards of 600 movies to Disney. Shares of Disney rose 45 cents, or 1.6%, to $28.35.
Waters Corp.
(WAT) - Get Report
said late Tuesday that first-quarter earnings will trail estimates because of weak sales, particularly in Europe. The company expects to earn 34 cents to 37 cents a share, compared with the Thomson First Call estimate of 45 cents a share. Shares dropped $9.52, or 20.6%, to $36.74.
Retail rivals
Best Buy
(BBY) - Get Report
and
Circuit City
(CC) - Get Report
both have delayed reporting fourth-quarter results. Best Buy, scheduled to report before the bell today, will wait until Friday to account for the favorable settlement of tax matters. Circuit City has delayed reporting to allow for a lease accounting review; results are expected within the next two weeks.
Tetra Tech
(TTEK) - Get Report
fell 16.9% after the company said it expects to report a fiscal second-quarter loss of more than $50 million. Shares of the environmental technology company finished $2.53 lower at $12.46.
ChevronTexaco
(CVX) - Get Report
will hold a midquarter update after the bell Wednesday. Analysts are expecting EPS of $1.45 for the quarter, according to Thomson First Call. The stock was added 44 cents, or 0.8%, to $58.33.
In brokerage action, Susquehanna upgraded
Travelzoo
(TZOO) - Get Report
to net neutral from net negative, citing the belief that the company's stock reward is now even with its risk. Shares jumped $10.60, or 25.1%, to close at $52.85.
Overseas markets finished mostly lower after yesterday's 80-point shellacking on the Dow, with London's FTSE 100 falling 0.4% to 4900 and Germany's Xetra DAX losing 0.1% to 4347. In Asia, Japan's Nikkei fell 0.3% overnight to 11,566, while Hong Kong's Hang Seng added 0.1% to 13,426.