Market Update: Nasdaq Closes at 5 p.m.; After-Hours Trading Canceled
(Updated from 4:19 p.m. EDT)
The weekend didn't start as soon as some Wall Street players hoped it would.
Nasdaq
extended trading for an hour today, until to 5 p.m. EDT, after a network problem forced the electronic stock market to temporarily suspend trading through its
SelectNet
and
Small Order Execution System
, or SOES. Today marked the second day in a row and the third time this month that the Nasdaq has had problems with its execution system.
Preliminary data showed that the
Nasdaq Composite Index closed higher by 34.1 points to about 2960. The
Dow Jones Industrial Average was stronger for much of the session, but a late-day pullback left the blue-chip measure down for the day. The Dow, which moved after 4 p.m. along with the Nasdaq, looks like it closed down by 66.49 points to about 10,500.
It appeared that the
S&P 500 index lost 2.1 points to about 1224.
"With cash on the sidelines and another rate cut from the Federal Reserve, investors are optimistic that we're nearing a short-term bottom," Michael O' Hare, head of block trading at
Lehman Brothers
said before the close. "The market is getting ready for a mid-summer rally. It is already absorbing bad news."
A key report on the manufacturing sector showed a lesser degree of contraction for this month than the previous month. The
Chicago purchasing managers' index, released at 10 a.m. EDT, rose to 44.4 in June from 38.7 in May, well above expectations and the highest reading since December. "The rise could indicate the worst is over," said the Chicago arm of the
National Association of Purchasing Managers
. The report shows that manufacturing in the Midwest is still contracting -- any number less than 50 means contraction -- but less severely than it had been in recent months.
For the second time this week, economic data is revealing strength in consumer confidence. The University of Michigan's
consumer sentiment index rose to 92.6 in June -- the highest level since January -- from 92 in May. Earlier this week, the Conference Board's
consumer confidence index increased for the second-straight month to its highest point for the year.
But the revised estimate for first-quarter
gross domestic product revealed a less rosy outlook. The figure was lowered to an annual rate of 1.2%, compared with the earlier 1.3% estimate. The government also reported that corporate profits declined by 6.2% in the first quarter, the sharpest drop in three years, and much more than the 3.1% decline estimated a month ago.
Investors have been willing to shake off some warnings. Communications chipmaker
PMC-Sierra
(PMCS)
said after the bell last night that its earnings and revenue for the second quarter would be lower than expected. But PMC-Sierra closed up by 6.6% to $31.07 anyway.
Stocks got a boost Thursday in the wake of the latest interest-rate cut and from a court ruling yesterday that set aside a lower court's decision to break up Microsoft. While analysts were divided on its implications on the broader market, some said it could inspire tech buying. Microsoft gained 0.4% to $73 for the day.
The
Russell 2000 had a nice day, gaining 1.9% according to early data, as traders adjusted to its official rebalancing. The annual change forces money managers running funds that track the index to buy and sell stocks accordingly.
The market got a boost from quarter-end window dressing, too. All week long, portfolio managers have been dressing up their portfolios to present to shareholders for the end of the quarter today.
While the market is expected to move higher in the short-term, analysts say the gains may not stick. "The Fed just cut rates, there's quarter-end window dressing, and the market is headed into a holiday week," said Fred Maudsley, managing director of trading at
Gruntal
. "These are all artificial things." Earnings season kicks in soon after the Independence Day holiday next week.
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