Stocks Edge Upward After Rocky Start
Updated from 9:44 a.m. EDT
Stocks on Wall Street were working their way up from early losses Thursday as an encouraging manufacturing report helped investors look past a raft of otherwise disappointing economic data.
The
Dow Jones Industrial Average
rose 18 points to 12,917, and the
S&P 500
was up 3 points to 1412. The
Nasdaq Composite
rose 9 points to 2505.
Investors were bearish at the open, but perked up after northeastern factory activity data showed vast improvement. The Philadelphia Fed Index came in at negative 15.6 for May -- still a sizable contraction, but far less egregious than last month's decline of 24.9, and better than the economists' consensus for negative 19.
"Overall the survey is soft," said Ian Shepherdson, chief U.S. economist with High Frequency Economics, "but its weakness has not been fully reflected in the one industrial survey that really matters, the
Institute for Supply Management report. And we know from this morning's IP data from the Fed that manufacturing is now struggling, though it is certainly not in meltdown."
Meanwhile, New York manufacturing data registered at negative 3.2 for May, down from a slight uptick in April and worse than break-even expectations.
Another early drag came from the
Federal Reserve
, which said industrial production fell 0.7% in April, worse than the 0.3% decline that had been expected. March was revised to show an increase of only 0.2%, rather than the 0.3% uptick that had been reported.
Still, said Tony Crescenzi, chief bond strategist at Miller Tabak and contributor to
RealMoney.com
, a sister site to
TheStreet.com
, those production numbers are "not a major surprise."
"April's drop overstates the impact of the economy on output, as strikes in the automobile sector shaved three-tenths of a percentage point from total output," Crescenzi wrote. He also cited the fact that April saw a large 1.2% decline aggregate hours worked in the manufacturing sector.
Shepherdson remains pessimistic. "The decline in output ex-autos was broad, with falls in consumer goods, materials, construction supplies and business equipment," he said in an emailed statement. "The dollar value of business equipment produced -- a key indicator of capital spending -- fell a hefty 1.8%, after being flat for the past three quarters or so. Further declines would be very worrying."
Capacity utilization was also a bit light, coming in at 79.7% compared with the 80.1% consensus forecast.
Elsewhere on the economic docket, jobless claims were roughly in line with expectations, rising by 6,000 to 371,000. That was about 1,000 more than had been predicted.
As the new day began, traders were greeted with word that
CBS
(CBS) - Get Report
would buy Internet media company
CNET
(CNET) - Get Report
for $1.8 billion. That news lifted CNET by more than 40%, but CBS was slipping 3.6%.
Separately,
General Electric
(GE) - Get Report
, a component of the Dow, is considering selling or parting ways with its appliances division, according to
The Wall Street Journal
. The unit could fetch $5 billion to $8 billion, the report said. Still, after a brief rise out of the gate, shares lately were slipping 12 cents at $32.39.
Meanwhile, investors were mulling reports that billionaire investor Carl Icahn -- who was said earlier this week to have begun acquiring large amounts of
Yahoo!
(YHOO)
stock -- has lined up 10 possible directors to nominate as replacements for the Internet company's board. Yahoo! shares were up 1.2%.
Icahn's interest came after
Microsoft
(MSFT) - Get Report
walked away from its merger offer for Yahoo!.
Elsewhere, Britain-based bank
Barclays
(BCS) - Get Report
lost 0.6% after reporting a $1.94 billion writedown and saying its first-quarter profit had withered from last year.
JC Penney
(JCP) - Get Report
said its first-quarter income plunged by 50% from a year earlier, and the retailer predicted that 2008 will be a difficult year. Still, shares were up 1.4%.
Among commodities, crude oil was up $1.23 to $125.45 a barrel, and gold futures were adding $14.10 at $880.60. The U.S. dollar slipped 0.2% against the euro at $1.5478 while yielding 0.5% to the yen at 104.82.
Treasury prices were erasing early losses. The 10-year note rose 4/32 in price to yield 3.90%, and the 30-year bond ticked up 1/32 in price, yielding 4.61%.
Markets abroad were mixed. In Asia, Tokyo's Nikkei 225 added 0.9% overnight, but the Hang Seng Index in Hong Kong slipped 0.1%. As for European bourses, London's FTSE 100 climbed 0.6%. Germany's Xetra Dax and the Paris Cac, however, lost roughly 0.1% apiece.