Updated from 4:06 p.m. EDT
Blue-chips rose Thursday while tech stocks stood still, as a combination of solid economic and geopolitical sent investors in search of old-line industrial shares.
Dow Jones Industrial Average closed up 155 points, or 2%, to 7997.1. The
Nasdaq ended down less than a point at 1221.6, while
S&P 500 rose 15 points, or 1.8%, to 855.
Blue-chips rose after the government said durable goods orders fell 0.6% in August. The decline was narrower than economists had forecast and followed a revised 8.6% increase in July. Investors were concentrating on a component of the data that showed another big uptick in corporate capital spending.
Separately, the Commerce Department said
new home sales rose 1.9% to an annualized rate of 996,000 in August, compared with a revised 977,000 in July. Economists were expecting the number to come in at 980,000.
Another government report showed
initial jobless claims fell 24,000 to 406,000, also better than expected.
The market also took encouragement from a speech by President Bush earlier in Washington. While still backing a resolution authorizing the use of force in Iraq, Bush acknowledged that the issue will be a topic of a "meaningful debate" in Congress.
"The security of our country is the commitment of both political parties and the responsibility of both elected branches of government. We are engaged in a deliberate and civil and thorough discussion. We are moving toward a strong resolution," Bush said.
Thursday's rally came despite a profit warning from telecom-equipment maker
and potentially bad news in the Martha Stewart insider trading probe. Nortel fell 10.9% after saying current-quarter revenue will be down 15% from the previous quarter's, instead of its previous prediction of down 10%.
saw its shares climb 10.3% to $31.10 after the hotel chain reaffirmed its outlook for the third quarter. The company said it expects to earn between 41 cents and 44 cents a share. Analysts are projecting a net profit of 42 cents.
jumped 33% to $2.94 as the market cheered labor's proposal late Wednesday to help cut costs at United Airlines and keep the second-largest carrier out of bankruptcy. Countering management's offer to hack away $9 billion in costs over the next six years, union representatives put forth a proposal to cut costs by $5 billion over five years. In a letter to UAL CEO Glenn Tilton, representatives from five unions say its cost-cutting plan will increase United's "core annual profitability" by $2 billion to $3 billion.
Health-care and benefits provider
set plans to cut nearly 3,000 jobs over the next year in order to ensure profitability in the face of reduced membership and a recent business realignment. The shares traded higher by 1.1% at $37.78.
Elsewhere, a report Thursday said investigators struck a plea agreement with the
brokerage assistant who handled Martha Stewart's trades in
. Douglas Faneuil will reportedly plead guilty to a misdemeanor and provide testimony to federal prosecutors in their probe of Stewart and others.
On the research front, Lehman Brothers pared its earnings forecast on financial services firm
J.P. Morgan Chase
, citing lower-than-expected trading results, higher loan loss provisions and an absence of heavy investment securities gains. Lehman cut its third-quarter estimates to 9 cents a share from 38 cents a share and lowered its price target to $20 from $23.
Elsewhere, Salomon Smith Barney cut its estimate of 2003 earnings for S&P 500 companies to $52.50 a share from $54. The brokerage said the new estimate reflects its expectation for a moderate economic recovery instead of an accelerating one.
Among sectors, airlines, lodging, homebuilders and utilities were exhibiting the most strength, while gold, biotech, networking and medical supplies were weaker. Advancers outpaced decliners 3 to 1 on the
New York Stock Exchange
. On the Nasdaq decliners were beat advancers 8 to 7. Volume was fairly heavy, as about 1.4 billion shares changed hands on each of the two exchanges.
Treasuries were lower, with the 10-year note down 5/32 to yield 3.77%.
In Europe, London's FTSE 100 rallied up 4.2% to 3850 while Germany's Xetra DAX rose 2% to 3021. In Asia, Japan's Nikkei rose 1.7% to 9321 while Hong Kong's Hang Seng was little changed at 2989.