Tech Leads Market to Sunny Side of Street
Updated from 4:27 p.m. EDT
Stocks in the U.S. finished on an upswing Thursday as relatively positive news out of the tech and retail space outweighed lackluster numbers on the economic front.
The
Dow Jones Industrial Average
was well off its top for the day, but still ended higher by 54.72 points, or 0.44%, to 12,581.98, and the
S&P 500
added 6.06 points, or 0.45%, to 1360.55.
Turning in a more solid performance throughout was the
Nasdaq Composite
, which surged 29.58 points, or 1.27%, to close at 2351.70, thanks especially to
Intel
(INTC) - Get Report
, which got an upgrade to buy from hold from Bank of America. Intel, up 3.1%, was also the Dow's best-performing component.
Breadth was positive. Around 3.64 billion shares changed hands on the
New York Stock Exchange
, and roughly 2.21 billion on the Nasdaq, as winners topped losers 3 to 2.
Still, remarked Paul Nolte, director of investments with Hinsdale Associates, "What we're seeing is nothing more than a rally. We've had three or four of these types of rallies, but really haven't broken any prior peaks. I still see it more as a continuation of the trading range we've been in for awhile."
Alan Gayle, senior investment strategist with RidgeWorth Capital Management, was surprised the market was able to work past some of the more negative developments, particularly out of
Lehman Brothers
(LEH)
. The investment bank said in its quarterly filing that broad-market turmoil had pulled down the value of some of its funds, and that it liquidated three funds worth roughly $1 billion.
"I was kind of surprised that the market was able to blow that off," said Gayle.
He also noted, however, that a guidance boost from
Wal-Mart
(WMT) - Get Report
could at least be giving the impression that the economy isn't spiraling down uncontrollably. "Clearly consumer news is the most important thing right now, so anything suggesting that consumer retrenchment will be modest will be good news to this market."
"I think the
consumer-related news is far from conclusive," he continued. "Nevertheless, incremental data is conclusive, and it looks like the market is in the mood to rise."
Along with Intel, BofA's positive note helped other chip stocks. Among those getting an upgrade to buy from hold were
Analog Devices
(ADI) - Get Report
,
Power Integrations
(POWI) - Get Report
and
Semtech
(SMTC) - Get Report
. Shares were up 5.1%, 10.1%, and 5.3%, respectively.
In addition,
PMC-Sierra
(PMCS)
,
LSI Logic
(LSI) - Get Report
and
National Semiconductor
(NSM)
were raised to neutral from sell. Shares tacked on 4.6% or more.
The Philadelphia Semiconductor Index shot up 1.8%.
Elsewhere on the corporate front, a number of retailers were shuttling in fresh numbers, among them Dow component Wal-Mart. The world's biggest retailer lifted its profit guidance for the fiscal first quarter even as it posted lower-than-expected same-store sales for March, and shares advanced 1%.
The rest of the nation's chains were also turning in monthly reports, many of which showed declines or slowdowns in spending. Still, much of the news came in better than expected, and retail shares were on the rise: the Dynamic Retail Intellidex and the S&P Retail Index jumped 1.7% and 1.8%, respectively.
Big-box retailer
Costco
(COST) - Get Report
said March comps climbed an above-par 7% thanks in large part to rising gas prices, without which the figure would have risen just 3%. Favorable currency exchange rates also had a significant impact. Shares ended up 0.7%.
Kohl's
(KSS) - Get Report
and
Gap
(GPS) - Get Report
, however, both reported double-digit decreases in same-store sales. Still, Kohl's numbers still weren't as bad as expected, and shares finished up 3.1%. Gap, whose results were well under consensus, gave back 2.2%.
Out of retail,
DuPont
(DD) - Get Report
stock added 1.2% after the company predicted a first-quarter profit of $1.29 a share, up from its earlier view of $1.14 to $1.19, citing strong growth in its agricultural business and emerging markets.
Also, the battle between
Microsoft
(MSFT) - Get Report
and
Yahoo!
(YHOO)
waged on as reports surfaced that the software giant is in talks to have
News Corp.
(NWS) - Get Report
join its bid for Yahoo!.
Meanwhile, the Internet-portal operator is reportedly in merger negotiations with
Time Warner's
(TWX)
AOL subsidiary. The developments come just as Yahoo! confirmed that it has agreed to do a trial run of an advertising partnership with
(GOOG) - Get Report
.
Separately, American Airlines grounded another 900 flights, bringing the total number of cancellations this week to more than 2,400, as the airliner finishes inspections of wiring in its MD-80 fleet. According to reports, the groundings could continue to mount tomorrow, but the company is aiming to get back to normal within the next few days.
AMR
(AMR)
, the parent company of American Airlines, climbed 7.6% in partial recovery from a sharp slide yesterday.
On the data side, the Labor Department said the number of people filing for unemployment benefits dropped to 357,000 last week -- 23,000 less than expected -- from the prior week's upwardly revised number of 410,000.
Ian Shepherdson, chief U.S. economist with High Frequency Economics, remarked, "We always assumed early Easter seasonals were largely to blame for the unexpectedly massive leap in claims last week. These new data strongly support that view."
Still, he noted that the trend continues to be poor. The eight-week moving average for claims has edged just above March 2001 levels, when the U.S. was at the start of the last recession.
"As far as we can tell, companies are increasingly taking the view that the slowdown will be longer, deeper and broader than they have been expecting, and layoffs are the only way to cut costs rapidly enough to support earnings growth," he said.
Also on the economic docket, the Census Bureau reported that the U.S. trade deficit in February, or the amount by which imports outweighed exports, jumped 5.6% from the prior month to $62.3 billion.
"The stubbornly large trade deficit heightens the risk of recession," said Peter Morici, a business professor with the University of Maryland and former chief economist at the International Trade Commission. "The deficit subtracts about $250 billion from
gross domestic product, and that amount could double if the economy slips into a prolonged recession."
Still, commodities erased an early uptick as equities gained ground, with crude oil closing down 76 cents to $110.11 a barrel. Gold futures lost $5.70 to $931.80 an ounce. The U.S. dollar also reversed course, lately firming against the euro to $1.5731, while adding 0.1% against the yen to 101.82.
Further, Treasury prices took a dip. The 10-year note was off 13/32 in price to yield 3.53%, and the 30-year bond shed 10/32 in price, yielding 4.34%.
Markets abroad were mostly falling. In Asia, Hong Kong's Hang Seng Index tacked on 0.8% overnight, but the Nikkei 225 in Tokyo lost 1.3%. Among European bourses, London's FTSE 100, Germany's Xetra Dax, and the Paris Cac closed down 0.3% apiece.