Updated from 3:24 p.m. EDT
Stocks closed higher Thursday as traders welcomed commentary from Ben Bernanke that suggested the
might soon pause its rate-hiking campaign.
Dow Jones Industrial Average
overcame a 50-point morning swoon and finished up 28.02 points, or 0.25%, at 11,382.51, its best close in six years.
Helping the turnaround were gains of 3% or more in
rose 4.31 points, or 0.33%, to 1309.72, while the
gained 11.32 points, or 0.49%, to 2344.95. The Nasdaq benefited from strength in the Philadelphia Semiconductor Sector index, which rose 1.3%.
"The action today comes thanks to Bernanke's comments," said Barry Hyman, equity market strategist with Ehrenkrantz King Nussbaum. "The market has been waiting for this potential end. The appropriate sectors moved higher today, and it helped the market.
"We've been stuck in an extremely narrow band for the last few weeks, and this could break us out," Hyman said.
About 2.08 billion shares traded on the
New York Stock Exchange
, with decliners matching advancers. Trading volume on the Nasdaq was 2.61 billion shares, with decliners narrowly outpacing advancers 8 to 7.
The 10-year Treasury bond rose 7/32 in price, bringing the yield down to 5.08% from a four-year high of 5.13%. The dollar was weaker against the euro and the yen.
Bernanke told Congress that "future policy actions will be increasingly dependent on the evolution of the economic outlook, as reflected in the incoming data." The Fed chairman also said that "at some point in the future the
Federal Open Market Committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook."
Traders have been seeking signs that the Fed is near the end of its 22-month rate-tightening run. Policymakers have lifted short-term rates by a quarter-point at 15 consecutive meetings, taking the fed funds target to 4.75% from 1%. The market currently foresees another quarter-point hike next month; after that, the jury remains out.
Bernanke reminded markets that even if the Fed were to take a break from boosting rates, that "does not preclude action at subsequent meetings. To support continued healthy growth of the economy, vigilance in regard to inflation is essential." He also said that higher energy prices are risks to the economy and to inflation rates.
"Bernanke has offered as clear a signal as we dared hope that a pause in the Fed's tightening program is imminent," said Ian Shepherdson, chief economist with High Frequency Economics. "Rates will surely rise in May, but you have to assume June is now firmly penciled-in for a pause."
To view Gregg Greenberg's video take on today's market, click here
Another monetary authority, China's People's Bank, is squarely in tightening mode. The central bank on Thursday raised its benchmark lending rate to 5.85% from 5.58%. "The increase in the lending rate is aimed at further strengthening the fruits of macro controls and keeping solid momentum for the economy to grow in a continuous, rapid, coordinated and healthy manner," the bank said.
"China People's Bank's comments talk about worries of an overheated economy and slowing growth," said Hyman. "The Bernanke speech took the steam out of this China story, which I think is as important or more than the comments from Bernanke."
Other economic news included Labor Department's report on first-time jobless claims, which rose 11,000 to 315,000 last week. Elsewhere, details of a Treasury Department note auction are expected this afternoon.
Oil, which has lost more than 3% this week after topping out above $75 a barrel on Friday, continued to ease, finishing down 96 cents to $70.97 on the June contract.
reported first-quarter earnings of $8.4 billion, or $1.37 a share, up from $7.86 billion, or $1.22 a share, a year ago. The Thomson First Call consensus was for a profit of $1.47 a share. Revenue grew to $88.98 billion from $82.05 billion last year. Exxon Mobil, which had been down 3% earlier, lost 68 cents, or 1.1%, to $62.42.
A downgrade of fellow Dow component
to underweight from neutral at JPMorgan also weighed on sentiment. Honeywell closed down 94 cents, or 2.1% to $43.13.
reported first-quarter earnings of $16 million, or 3 cents a share, down from $46 million, or 10 cents a share, a year ago. Excluding items, the company earned 9 cents a share, matching the consensus. Revenue was up 3% from last year to $4.33 billion, also in line with estimates. The stock fell 59 cents, or 2.9%, to $19.96.
XM Satellite Radio
posted a first-quarter loss of $149.2 million, or 60 cents a share, swelling from a loss of $120 million, or 58 cents a share, a year ago. Revenue more than doubled to $208 million. Analysts were looking for a loss of 55 cents a share on revenue of $201.5 million. The stock lost $1.21, or 5.5%, to $20.80.
reported its results Thursday morning, saying first-quarter earnings rose 24% to $104.4 million, or $2.35 a share. The number missed estimates, and Beazer also issued guidance that was slightly shy of forecasts. Beazer was lower by $2.20, or 3.6%, to close at $59.05.
Things were worse at
, where fourth-quarter earnings from continuing operations rose to $375.8 million, or $2.92 a share, missing estimates by 19 cents. New orders fell by 11%, and the homebuilder slashed 2007 guidance. Centex dropped $5.05, or 8.3%, to $55.70.
The losses in Beazer and Centex pressured the Philadelphia Housing Sector index, which fell 1.9%. In other sectors, the Amex Gold Bugs index lost 3.9% and the Amex Oil index was off 0.7%. The Philadelphia/KBW Bank Sector index added 2%, and the S&P Retail index rose 0.4%.
posted first-quarter net income of $714 million, or 36 cents a share, up 34% from a year ago. Sales rose 3% to $4.68 billion. Results beat the Thomson First Call consensus for earnings of 32 cents a share on revenue of $4.61 billion. Shares ended up 30 cents, or 1.2%, to $25.27.
first-quarter earnings were 41 cents a share before items, beating the Wall Street consensus of 34 cents a share. For the second quarter, Starwood expects to earn 58 cents a share, 2 cents ahead of forecasts. Starwood was higher by $2.89, or 5.4%, to $56.88.
quarterly earnings rose 3% to $401.7 million, or 68 cents a share, while adjusted earnings of 64 cents a share were a penny better than expected. The insurer also bumped up full-year guidance. The stock plummeted $9.43, or 20.3%, to $37.
surged 15.4% even after the retailer posted a first-quarter loss of $25.1 million, or 37 cents a share, widening from a year-ago loss of $5.3 million, or 7 cents a share. Excluding items, the company posted earnings of 77 cents a share. OfficeMax finished up $5.14 to $38.49.
had first-quarter net income of $684 million, or $1.10 a share, down from $689 million, or $1.13 a share, a year earlier. The Thomson First Call average estimate was for earnings of 96 cents a share. Countrywide also raised the low end of its 2006 profit forecast. Countrywide Financial rose $1.35, or 3.6%, to $39.30.
posted fourth-quarter earnings of $110.7 million, or 32 cents a share, beating estimates. At $472.3 million, sales were about $7 million ahead of forecasts. Xilinx added $1.67, or 6.3%, to $28.24.
posted a first-quarter adjusted profit of 16 cents a share, beating estimates, as the travel and hospitality conglomerate saw revenue gains in each of its four units. Guidance for 2007 remained intact. Cendant closed down 19 cents, or 1.1%, to $17.38.
Big reports came after the bell Thursday, including
. The software maker posted a net profit of $2.98 billion, or 29 cents a share, up 26% from last year. Results included legal charges of 3 cents a share. Revenue rose to $10.9 billion from $9.6 billion last year. The Thomson First Call consensus was for EPS of 33 cents on revenue of $11 billion. Microsoft finished the session up 15 cents, or 0.6%, to $27.25 but was trading lower in the after-hours session.
Overseas, London stocks finished down 0.7% to 6060, while Germany lost 0.6% to 6068. Japan's Nikkei rose 0.3% overnight to 17,115 and Hong Kong's Hang Seng added 0.3% to 16,743.