Stocks Wilt at Close
Updated from 4:05 p.m. EST
Stocks gave back solid gains and closed lower Thursday, despite encouraging earnings reports from
Wal-Mart
(WMT) - Get Report
and several major tech outfits.
The
Dow
finished down 7.26 points, or 0.07%, at 10,665 after climbing over its 32-month high of 10,737.7 earlier in the day. At its peak, the Dow was at about 10,754. The
S&P 500
lost 4.76 points, or 0.41%, to 1,147, and the
Nasdaq
dropped 30.51 points to 2,046. All three indices suffered moderate losses Wednesday as well. Volume on the NYSE was 1.5 billion, with just over 2 billion shares traded on the Nasdaq.
Peter Cardillo, chief market analyst at SW Bach, blamed the afternoon's retreat primarily on options expirations. "I think that basically weighed on the market, and as the Nasdaq approaches that 2,100 level, there seems to be resistance there," he said. "Basically, the money changed into stocks continues, but it does appear that there is some technical resistance at present levels."
Tomorrow marks a regular expiration of option contracts, an event that often leads to volatility in the days leading up to it as traders unwind old positions and buy new ones.
The 10-year Treasury bond rose 4/32, yielding 4.03%.
The dollar traded near a six-day high against the euro and rose for a fifth day versus the yen in New York. The euro was recently buying $1.2714, up from $1.2664 at Wednesday's closing bell. The dollar is buying 107.02 yen.
Applied Materials
(AMAT) - Get Report
set the tone in the technology sector, reporting late Wednesday that it returned to a profit in its first quarter with a 48% jump in sales. The company reported net income of $82.4 million, or 5 cents a share, for the quarter, compared to last year's net loss of $65.6 million, or 4 cents a share. Revenue rose to $1.56 billion from $1.05 billion. Its stock ended down 18 cents, or 0.81%, to $22.13.
Chipmaker
Broadcom
(BRCM)
pushed its first-quarter guidance up sharply, saying that revenue will grow by 16% to 18%. Its shares dropped 90 cents, or 2.12%, to $41.56.
Wal-Mart reported an 8% increase in earnings for the latest quarter on a 12% rise in sales, sending its shares up $1.18, or 2.06%, to $59.38. Its rival,
Target
(TGT) - Get Report
, said its fourth-quarter net income jumped 21%. The company earned 91 cents a share, which surpassed Wall Street's expectations. Target shares slumped 58 cents, or 1.37%, to $41.71.
DaimlerChrysler
(DCX)
said its U.S. Chrysler division increased its earnings in the fourth quarter, but not enough to prevent a full-year loss of $637 million. The automaker's shares lost 20 cents, or 0.43%, to end at $46.69.
Former
Enron
chief executive Jeffrey Skilling surrendered to the FBI on Thursday morning and was indicted on 42 counts of securities fraud related to the energy company's scandalous demise. Skilling resigned his post less than four months before Enron collapsed.
In economic news, initial jobless claims fell 24,000 to 344,000 in the week ended Feb. 14, which was better than economists' consensus forecast of 353,000. Claims have now been below the 400,000 level thought necessary for job market improvement for 19 straight weeks.
The Conference Board reported a solid gain in its index of leading economic indicators that matched economists' expectations. The index rose 0.5% last month, after a 0.2% increase in December and a 0.3% gain in November.
Also, the Federal Reserve Bank of Philadelphia's index of manufacturing activity fell to 31.4 in February, from 38.8.
The release of the government's producer price index for January has been postponed indefinitely because of technical problems. Economists expected a 0.4% increase for the month, partly because of higher energy prices.
With no major earnings announcements scheduled for Friday, January's consumer price index report from the Labor Department, the economy's main gauge of inflation, will set the tone for the day. Due out at 8:30 a.m. EST, the index is projected by economists to advance from a 2% growth rate to 3%. Then, at 10:30 a.m. EST, the Economic Cycle Research Institute will report the reading on its weekly leading index, a broad measure of leading economic indicators.
Larry Wachtel, senior market analyst at Wachovia Securities, thinks stocks are in a correctional phase in what is the 12th month of this bull market. "I don't think the market is capable of putting together three or four good days," he said. "I think it's a stutter-step situation. You rally one day and you fade the next, and so each day is an adventure unto itself. But there's no doubt that the economic news is good, and the earnings news certainly is favorable."
Overseas, London's FTSE was up 1.2% to 4496, while Germany's Xetra DAX gained 0.9% to 4133. In Asia, Japan's Nikkei closed up 0.7%, but Hong Kong's Hang Seng lost 0.4% to 13,867.