Blue Chips Trip Again - TheStreet

Blue Chips Trip Again

The Nasdaq ekes out a gain as the semiconductor sector rises.
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Updated from 4:15 p.m. EST

Blue chips were hampered for a second session Thursday by a rally in energy prices, while tech stocks managed to collect new gains after enduring a rocky outing.

Following an upside start, the

Dow Jones Industrial Average

quickly went negative and closed down 52.39 points, or 0.41%, to 12,686.02. The index was led lower by losses in

General Motors

(GM) - Get Report

and

Merck

(MRK) - Get Report

.

The

S&P 500

also lost ground, ending off 1.25 points, or 0.09%, to 1456.38.

Much like the previous session, tech stocks outperformed, thanks to gains in

Maxim Integrated

(MXIM) - Get Report

,

Linear Technology

(LLTC)

and

Altera

(ALTR) - Get Report

. The

Nasdaq Composite

edged up 6.52 points, or 0.26%, to 2524.94.

"The Nasdaq did fare better today, but investors still found excuses to take a little money off the table," said Peter Cardillo, chief market economist with Avalon Partners. "We're searching for reasons to not lock in profits. With the absence of economic news, we're a bit softer, and we'll probably move sideways into next week, at least until we have a catalyst either way."

Ken Tower, chief market strategist with CyberTrader, said that the market should still remain in an upward trend.

"The bulls remain the dominant force, and traders should treat any pullback as a buying opportunity," said Tower. "It has been an amazing rally with the bulls able to shift economic expectations while continuing to push the market to new highs."

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Roughly 2.65 billion shares changed hands on the

New York Stock Exchange

, and decliners beat advancers by a 5-to-3 margin. Volume on the Nasdaq reached nearly 2.05 billion shares, with winners matching losers.

On Wednesday, the Dow finished with a loss of 48.23 points, or 0.38%, at 12,738.41. Before the pullback, the industrials had four straight all-time closing highs. The Nasdaq tacked on 5.38 points, or 0.21%, to 2518.42.

Lending to the drop during the current session was a rise in commodities prices. Crude futures retraced early losses following the latest weekly inventory report from the Energy Department. The April contract rose 88 cents to finish at $60.95 a barrel. Natural gas gained 8 cents to $7.72 per million British thermal units.

Last week, crude inventories rose by 3.7 million barrels. Distillate supplies fell by 5 million barrels, while gasoline stocks slipped by 3.1 million barrels.

Treasury prices were also on the move lower. The 10-year note was down 9/32 in price, yielding 4.73%, and the 30-year bond was off 20/32, yielding 4.83%.

Among the lead equity stories was a report that Detroit's Big Three could be on the verge of becoming the Big Two. According to

The Wall Street Journal

, GM has had talks about buying the Chrysler division of

DaimlerChrysler

(DCX)

. Speculation about the potential for such a deal has been in the market for a few days.

Elsewhere, luxury homebuilder

Toll Brothers

(TOL) - Get Report

topped quarterly earnings estimates, but its profits were sharply lower than in the same period the previous year. Toll also said it was too early to say the housing market has turned upward. Shares slid 93 cents, or 2.8%, to close at $31.93.

Shares of

Apple

(AAPL) - Get Report

and

Cisco

(CSCO) - Get Report

finished with slight gains after the two announced an end to the dispute over the iPhone trademark. No financial terms of the agreement, which will allow both companies to use the name, have been disclosed.

Apple shares added 0.4% at $89.51. Cisco tacked on 0.1% to $27.40.

In M&A news,

Whole Foods Market

(WFMI)

said after the previous close that it will purchase rival

Wild Oats

(OATS)

for $565 million, which figures out to roughly $18.50 a share. Whole Foods will also assume $106 million in debt from Wild Oats.

Whole Foods was one of the Nasdaq's best performers, adding 14% to $52.11. Wild Oats surged 17.1% to $18.41.

On the research front, Citigroup upgraded

Analog Devices

(ADI) - Get Report

to buy from hold, A.G Edwards raised its rating on

Seagate Technology

(STX) - Get Report

to buy from hold, and Morgan Stanley improved

National Semiconductor

(NSM)

to overweight from equal-weight.

Analog Devices jumped 10.4% to $36.80. Seagate finished higher by 1.8% at $27.53. National Semi climbed 7.4% to $25.39.

On the economic docket, the Labor Department said that initial jobless claims fell by 27,000 to 359,000 last week. The less volatile four-week moving average of claims rose by 1,250 to 326,250.

Stocks were stronger in Europe and in Asia. London's FTSE 100 was higher by 0.4% to 6381, and Frankfurt's Xetra DAX ended up 0.5% at 6974. Tokyo's Nikkei was adding 1.1% at 18,109, and Hong Kong's Hang Seng advanced 0.8% to 20,809.