Stocks Finish Mixed; Bonds Rally
NEW YORK (TheStreet) -- Stocks finished on a mixed note Thursday as news of the House Democrats' opposition to President Obama's tax deal held the stock market in check and sparked a rally in bonds.
The
Dow Jones Industrial Average
dipped 2 points to settle at 11,370. Earlier in the session, the blue-chip index climbed as high as 11,413, a gain of roughly 40 points. The
S&P 500
rose for the third straight day, adding 5 points, or 0.3%, to 1,233, while the
Nasdaq Composite
continued its winning streak, rising 7 points, or 0.3%, to 2,617, its highest level since January 2008.
DuPont
(DD) - Get Report
was a soft spot within the Dow after the chemical giant gave a 2011 outlook that disappointed some market watchers, according to a
Reuters
report. The company said it exceeded its internal 2010 targets but maintained its full-year outlook for earnings of $3.10 per share and set 2011 per-share earnings guidance at a range of $3.30 to $3.60 per share. The stock shed 1.1% to $48.32.
McDonald's
(MCD) - Get Report
and
Boeing
(BA) - Get Report
were other notable blue-chip losers.
Bank of America
(BAC) - Get Report
and
JPMorgan Chase
(JPM) - Get Report
were among stocks topping the Dow along with
Verizon
(VZ) - Get Report
and
Cisco Systems
(CSCO) - Get Report
.
Financials saw the session's strongest performance, led by shares of
AIG
(AIG) - Get Report
, which rose 13% to $47.78 following a Thursday filing with the
Securities and Exchange Commission
showing that hedge fund Fairholme Capital Management has bought nearly two million additional AIG shares over the past few weeks.
In addition, analysts at both Goldman Sachs and Blackrock have made bullish comments on the sector in the last two days.
The
House Democratic caucus voted on Thursday to reject President Obama's tax deal as it was "currently written." The vote is nonbinding on House Speaker Nancy Pelosi as she decides whether to bring the issue to the floor, but is further evidence of the strong opposition President Obama faces from House Democrats on the deal.
Markets have been rooting for the tax deal, hoping that it would bring on a speedier economic recovery as businesses resume hiring.
Treasuries gained for the first time in three days on the back of a stronger-than-expected response to the Treasury's $13-billion auction of 30-year bonds. The 30-year Treasury note rose 24/32, weakening the yield to 4.412%. The 10-year note rose by 14/32, diluting the yield to 3.221%. Mortgage rates rose to a six-month high, according to Freddie Mac's weekly survey of conforming mortgages, released on Thursday.
The Labor Department said early Thursday
initial jobless claims fell by 17,000 to 421,000 in the week ended Dec. 4, from 438,000, previously. The decline was an upside surprise for the market, which had been expecting a drop of 7,000 claims to 429,000 from an initially-reported level of 436,000.
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The equity market response to the jobs data, however, remained lukewarm. "The decline in initial jobless claims certainly isn't a significant enough number to impress the market," said Rob Russell, president of Russell & Co. "It confirms that we're moving further from the peak but we're still far from being out of the woods. Plus, I think people see the seasonal hiring impact. I'll be interested to see where the job market stands after the holidays."
The Department of Commerce said wholesale inventories advanced 1.9% in October after jumping 2.1% in September. The increase exceeded market expectations for growth of 0.7%.
Sirius XM Radio
(SIRI) - Get Report
saw its stock rise 5.7% to $1.39 on news that Howard Stern signed a new five-year contract with the company.
Barclays Capital
initiated a round of upgrades to asset managers.
Legg Mason's
(LM) - Get Report
stock shot up 2% to $35.92;
Janus Capital
(JNS)
saw its stock jump 4.85 to $12.31 and shares of
Waddell & Reed Financial
(WDR) - Get Report
surged 2.9% to $34.12.
Dell
(DELL) - Get Report
is in talks with
Compellent Technologies
( CML) regarding a possible acquisition. Under the agreement, Dell would acquire the data storage company for $27.50 per share. Dell's stock closed lower by 0.2% at $13.65 while Compellent's stock plunged 14% to $29.04.
Ford
(F) - Get Report
said it is hiring 1,800 workers and spending $600 million to overhaul a factory in Kentucky to build small utility vehicles. Separately, Bank of America Merill Lynch
raised its price target on the stock to $24 a share. Shares rose 0.4% to $16.76.
Shares of
Lululemon
(LULU) - Get Report
soared 14.1% to $63.56 after the athletic apparel retailer said third-quarter net income soared 82%. Lululemon exceeded Wall Street's expectations with per-share earnings of 20 cents per share on sales of $175.8 million.
Smithfield Foods
(SFD)
saw its stock advance 11.3% to $19.70 after the pork processor swung to a second-quarter profit of 86 cents per share on higher pork prices and sales increased 11.4% to nearly $3 billion. Analysts had projected a per-share profit of 56 cents per share on sales of $3.2 billion.
Dutch semiconductor equipment maker
ASML
(ASML) - Get Report
saw shares rise 7.3% to $37.78 after the company said it expects fourth-quarter bookings to exceed €2 billion ($2.66 billion) on strong demand for lithography equipment.
Shares of
Dean Foods
(DF) - Get Report
, among the worst S&P 500 performers year to date, surged 12.6% to $8.39 on Thursday after it said it will settle a lawsuit for $30 million, issue $400 million in senior notes and that it appointed a new chief account executive.
Shares of
Goodyear Tire & Rubber
(GT) - Get Report
jumped 10% to $11.55 after Bank of America Merrill Lynch upgraded the stock to buy from underperform.
State Street
(STT) - Get Report
fell 1% to $45.74 after it sold $11 billion worth of mortgage- and asset-backed securities.
Airgas
(ARG)
fell 6% to $61.84 after
Air Products and Chemicals
(APD) - Get Report
raised its bid to $70 per share,
lower than the company was expecting.
In commodity markets, the January crude oil contract rose 9 cents to settle at $88.37 a barrel. Analysts are turning bullish on crude oil as hopes of a global recovery grow, and they expect prices to touch $100 in 2011.
The most actively traded February gold contract traded higher by $9.60 to settle at $1,392.80 an ounce.
The dollar was trading flat against a basket of currencies, with the dollar index up by 0.08%.
Global markets finished higher on Thursday. In Europe, the
Bank of England kept its key lending rate unchanged at 0.5%, as expected, and
Fitch downgraded Ireland's credit rating by three steps to BBB+ on the rising costs of its banking system rescue.
The FTSE in London added 0.2%, while the DAX in Frankfurt slipped by 0.2%.
Japan's government upwardly revised the country's economic growth rate for the July-to-September period to 4.5% from 3.9%. Japan's Nikkei advanced 0.5%, and Hong Kong's Hang Seng added 0.3%.
--Written by Melinda Peer and Shanthi Bharatwaj in New York
.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.