Thursday's Market: High Hopes for Chips Help Dow, Nasdaq Close Higher
Stocks pushed higher on a low-volume day, as the market prepared for the midquarter update from
Intel
(INTC) - Get Report
after the close of regular trading.
Ahead of Intel's earnings update, investors were encouraged by reports that suggest the semiconductor sector's cycle may have bottomed. Chip stocks surged after a report from the
Semiconductor Industry Association
today said the industry will rebound in the second half of this year and
National Semiconductor
(NSM)
said that the worst bookings quarter may be in the rear-view mirror.
The
Nasdaq Composite finished ahead 46 points, or 2.1%, to 2264, shaking off another splash in the confessions bucket from communications chipmaker
Broadcom
(BRCM)
late yesterday. Like the index on which it trades, Broadcom closed up 13.1% to $40.24.
"The stock
was rewarded by people who think this is the worst," said Jay Meagrow, vice president of trading at
McDonald
. Wall Street awaits confirmation from Intel, an industry bellwether. Over the past three quarters, Intel has warned of revenue shortfalls in similarly timed updates. The chipmaker ended up 4.4% to $31.14. The
Philadelphia Stock Exchange Semiconductor Index
jumped 7.7%, making it today's strongest sector on the stock market.
The
Dow Jones Industrial Average, which spent more than half of the day below the flatline, ended the day up 21 points, or 0.2%, to 11,090.74.
Philip Morris
(MO) - Get Report
was the biggest drag on the index, falling 3% to $48.52. A Los Angeles court yesterday ordered the tobacco giant to hand over more than $3 billion to a 56-year-old man with lung cancer.
The broader market
S&P 500 slipped 7 points, or 0.6%, to 1276.96. As a group, retailers advanced modestly, despite mixed May
same-store sales numbers released this morning by a bevy of retailers. The
S&P Retail Index
rose 1.2%. Blue-chip stock
Wal-Mart
(WMT) - Get Report
, which posted an increase in sales (but the results were at the low end of expectations), inched up 0.7% to $51.10.
So far this confession season, earnings news from big corporate fish has been weighted to the downside.
Sun Microsystems
(SUNW) - Get Report
last week warned it would miss its second-quarter targets.
Hewlett-Packard
(HWP)
cautioned that a global slowdown in information technology could hurt its revenue.
J.P. Morgan Chase
(JPM) - Get Report
yesterday said its expects trading revenue for the next three quarters to be weaker than first-quarter results because of poor market conditions.
But investors have been concentrating on an earnings bottom and on some good news. Earlier this week, chipmaker
Xilinx
(XLNX) - Get Report
and telecommunications equipment provider
Lucent
(LU)
made positive affirmations about the state of their finances.
In April and early May, investors bet that corporate earnings would begin accelerating again in the third quarter of this year, and they bid stocks up significantly. The Dow is up 18.1% from its March 22 low of 9389.48, while the Nasdaq is ahead 38.1% from its April 4 low of 1638.80. But a consensus now seems to be forming that a recovery won't happen until the fourth quarter of this year or early next year.
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International
European markets were mixed. The London
FTSE 100
gained 46.8 to 5948.3, the Paris
CAC-40
fell 43.1 to 5453.4, and Frankfurt's
Xetra Dax
lost 8.2 to 6185.3.
Late-day rebounds in both Hong Kong and Tokyo allowed major market averages there to close higher overnight. Tokyo's
Nikkei 225
ended up 102.67 points, or 0.78%, while Hong Kong's
Hang Seng
closed up 127.42 points, or 0.94%.
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