Wall Street Builds on Gains

Financials are higher, led by Merrill Lynch.
By Sarina Penn ,

Stocks in New York were rallying into the afternoon Thursday as investors took heart in a recovering U.S. dollar and relatively positive news out of the financial sector.

The major averages took a dip at midmorning amid mixed economic data and an influx of uneven corporate numbers, but were lately soaring.

Dow Jones Industrial Average

was leaping 132 points at 12,895, and the

S&P 500

rose 13 point to 1393. The

Nasdaq Composite

climbed 27 points to 2432.

Buying pressure intensified after

Merrill Lynch

(MER)

announced the investment bank is keeping its dividend steady at 35 cents a share, bolstering the hope that financials have endured the worst of the credit crisis and are now primed for recovery. Merrill shares were up 6.1%.

Credit Suisse

(CS) - Get Report

gained ground, as well, despite posting its first shortfall in more than five years as it wrote off $5.14 billion in bad assets. That pales in comparison to writedowns at Swiss rival

UBS

(UBS) - Get Report

, and Credit Suisse called its capital position "strong," suggesting it won't need to raise any cash, as UBS was forced to do this month. Credit Suisse shares rose 3.9%.

T. Rowe Price

(TROW) - Get Report

was also among the big financial winners, jumping 9.4%, after the asset manager said first-quarter earnings grew by 6% to $151.5 million despite broader economic troubles. Per-share income missed expectations by a penny.

The

NYSE

Financial Sector Index was surging 2.1%, and the KBW Bank Index rocketed 4.3%.

Elsewhere,

Ford

(F) - Get Report

was also among the day's winners after the carmaker posted a surprise first-quarter profit of $100 million thanks to a robust showing in Europe and South America. That offset a loss in its North American segment, which itself was narrowed sharply from last year. Shares bounced 12.9%.

Further, tech titan

Apple

(AAPL) - Get Report

recovered from early losses, gaining 2.9%, after the company saw its profit jump 36% to comfortably beat analyst estimates. Shares were down earlier as investors reacted to weak guidance for the current quarter.

Meanwhile, the U.S. dollar leaped 1.5% against the euro at $1.5662, while firming by 0.9% against the yen. Simultaneously, the recent surge in oil prices cooled off. Crude was down $2.61 to $115.69 a barrel. Gold futures were sliding, as well, losing $22.70 to $886.30.

In the wake of those moves, oil-and-gas names and gold miners were surrendering ground.

ConocoPhillips

(COP) - Get Report

reported crushing Wall Street targets with earnings of $4.1 billion, or $2.62 a share, thanks to advancing oil futures. But the stock was still losing 1.7%.

Rivals

Exxon Mobil

(XOM) - Get Report

and

Chevron

(CVX) - Get Report

gave up 1.3% and 1.6%, respectively.

Gold miners

Goldcorp

(GG)

,

Barrick Gold

(ABX)

and

Kinross Gold

(KGC) - Get Report

each sank 4.1% or more.

Treasury prices plunged as investors moved their funds into equities. The 10-year note was down 23/32 in price to yield 3.82%, and the 30-year bond slid 1-4/32 in price, yielding 4.56%.

As for economic data, the Labor Department reported that the number of people filing for unemployment benefits dropped by 33,000 people last week to a better-than-expected 342,000. The consensus called for an unchanged figure.

Also, durable-goods orders -- an important indicator of factory activity -- stepped back 0.3% last month, according to the Commerce Department. That's worse than the flat number economists were expecting, but still an improvement on February's figure, which itself was revised to a 0.9% drop from the prior figure of minus 1.7%.

Separately, the Census Bureau said new-home sales in March sank 8.5% from the prior month to a 526,000 annual pace. A number more on the order of 580,000 had been anticipated.

Back in equities,

Amazon.com

(AMZN) - Get Report

slumped 3.3% after the online retailer eased its 2008 operating-earnings forecast and reporting an essentially flat operating margin in the first quarter. Analysts were hoping for some improvement. The Internet retailer also reported better-than-expected earnings of $143 million on soaring sales of $4.13 billion.

Motorola

(MOT)

, meanwhile, surrendered 2.4% after its quarterly loss and weak second-quarter projection.

Outside of tech,

Starbucks

(SBUX) - Get Report

was also losing ground on its soft guidance. The coffee seller said tough economic conditions should keep its customer-traffic numbers down and force a first-quarter profit drop to 15 cents a share from 19 cents last year. That's well under the consensus estimate. Shares were plunging 10.8%.

Markets overseas were mixed. The Hang Seng Index in Hong Kong jumped 1.6% overnight at 25.681, but Tokyo's Nikkei 225 lost 0.3%. In Europe, London's FTSE 100 dropped 0.5% and the Paris Cac shed 0.3%. Germany's Xetra Dax added 0.4%.

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