Blue Chips Find Strength

The Dow and S&P overcome sluggishness to finish higher. The Nasdaq slips.
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Updated from 4:13 p.m. EST

Stocks in the U.S. had a sluggish session Thursday as traders weighed mixed economic data, but a spurt of buying late helped the blue-chip averages finish with gains for day.

The

Dow Jones Industrial Average

rose 44.06 points, or 0.33%, to 13,517.96, after falling more than 100 points earlier in the session.

Dow component

Honeywell

(HON) - Get Report

led the way with a 5% gain after affirming this year's forecast and predicted that next year's sales would climb 5% to 7%.

Elsewhere, the

S&P 500

also overcame weakness to add 1.82 points, or 0.12%, to 1488.41. The

Nasdaq Composite

stayed in negative territory, slipping 2.65 points, or 0.1%, to 2668.49.

"We'll gladly take any up close, especially after a volatile day like today," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "But I'm still sensing that most participants are watching, waiting from the sidelines, keeping their powder dry while a few institutions or hedge funds push the market around."

Breadth was weak Thursday while volume was strong. On the

New York Stock Exchange

3.54 billion shares changed hands, as decliners topped advancers by nearly a 2-to-1 margin. Volume on the Nasdaq reached 2.10 billion shares, with losers outpacing winners 3 to 2.

Banks and securities firms contributed to much of Wall Street's early weakness. Both the NYSE Financial Sector Index and the Amex Securities Broker/Dealer Index declined 1.2%.

"People are skeptical about what's happening with brokers and banks," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "We're still expecting more writedowns to come, and that's feeding concern."

Also soft were the Philadelphia Semiconductor Sector Index, down 1.1%, and the Philadelphia Gold and Silver Index, off 2.9%.

"This is a very nervous and uncertain market right now," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "The volatility is too high. The market is bound to struggle for the next few days."

Last time out, the Fed said it would join forces with four other Western central banks to get at least $40 billion in new cash circulating around the world in an effort to reinvigorate the credit markets.

The major averages opened sharply higher before the gains unraveled. After swinging in a range of nearly 400 points, the Dow finished up 41.13 points, or 0.3%, at 13,473.90.

As a new session arrived, doubts over the effectiveness of the Fed's move to inject cash were raised.

"Clearly, the Fed is feeling its way in the dark here," said Ian Shepherdson, chief economist with High Frequency Economics. "Current conditions are unprecedented in modern times. We think these measures are a step in the right direction, but there is simply no way to know for sure how effective they will be."

Overseas markets also were hit as many questioned the central banks' action. Overnight in Asia, Hong Kong's Hang Sang dropped 2.7%, and Japan's Nikkei 225 slumped 2.5%. In Europe, London's FTSE 100 lost 3%, and Germany's Xetra Dax eased 1.8%.

Traders also had to contend with a set of mixed economic releases out before the open. On the inflation front, the Labor Department said its producer price index jumped 3.2% last month, doubling expectations to become the largest increase in more than 34 years.

The core PPI, which strips out food and energy from the wholesale prices, rose 0.4% and also doubled expectations. On Friday, the consumer price index -- viewed as the more important of the two reports -- will be released.

Meanwhile, the Commerce Department gave investors some positive news in the form of retail sales data for November. Sales climbed 1.2% last month, the largest increase in six months, compared with expectations of a 0.7% rise. Excluding autos, retail sales were up 1.8% last month, the biggest advance in nearly two years.

Despite the strong retail sales data, the S&P Retail Index lost 1.1%.

Also, the Labor Department said that initial jobless claims fell by 7,000 last week to 333,000 claims. The less volatile four-week moving average slipped 2,000 lower to 338,750 claims.

Elsewhere, the Commerce Department said shortly after the opening bell that business inventories rose 0.1% in October.

U.S. Treasury securities slid sharply after the economic releases. The 10-year note was down 24/32 in price, pushing the yield to 4.19%. The 30-year bond was off 1-13/32 in price, yielding 4.63%.

Crude prices retreated but did little to calm investors. Oil prices, which jumped nearly 5% last time, were down $2.14 to close at $92.25 a barrel. Gold and silver futures also finished lower.

Among U.S. corporate news,

Lehman Brothers

(LEH)

said fourth-quarter earnings fell from a year ago. Still, the broker's results topped the Thomson First Call average estimate. Lehman shed 45 cents, or 0.7%, to $61.37.

Costco

(COST) - Get Report

posted fiscal first-quarter earnings that rose 11% from last year. Earnings and sales were in line with expectations, but shares ended lower by $1.65, or 2.4%, to $68.54.

Away from earnings,

Biogen Idec

(BIIB) - Get Report

tumbled 23.7% after company said it has still not found an acquirer after saying it would put itself up for sale. Shares lost $17.97 to $57.91.