Updated from 4:03 p.m. EDT
After selling off in the first half of the session Wednesday, the major averages staged a furious rally that allowed the
Dow Jones Industrial Average to end with a triple-digit gain and the
Nasdaq to finish well above its worst level of the day.
The Dow, which had been as low as 9831, closed with a gain of 113.41 points, or 1.1%, at 10,059.63. The Nasdaq ended down by 10.70 points, or 0.6%, at 1677.53, after going as low as 1643. The
S&P 500 tacked on 9.54 points, or 0.9%, to 1086.46.
For the second straight day, a report showed the economy still expanding, but at a slower pace than had been hoped. The Institute for Supply Management, formerly the National Association of Purchasing Management, said its latest survey showed a decline in factory activity in April. The ISM's
purchasing managers' index fell to 53.9, down from a reading of 55.6 in March. Economists polled by
expected the number to come in at 54.6, while analysts quizzed by
were looking for a reading of 55.
A number above 50 indicates expansion in the factory sector, while a reading below that level signals contraction. The new-orders component of the report fell to 59 from 65.3.
Separately, the government's latest report on
construction spending revealed a 0.9% drop in March following a 0.7% increase in February, a steeper decline than economists were expecting. Overall, the data suggest that the recovery is under way but may not be progressing as quickly as initially thought. The major indices initially dropped on the news and looked as if they were in for a rough session before turning things around after the midpoint of trading.
Investors also digested news that the merger of
can proceed. The companies
cleared a big hurdle when a Delaware judge dismissed a lawsuit from Walter Hewlett, who has been trying to block the deal. H-P plans to close the acquisition and officially combine the two companies May 7. H-P was down 1.4% to $16.86, and Compaq gained 5% to $10.65.
Corporate earnings continued to roll in, even though the pace of the reports has slowed, but several influential names are still being heard from. Cable operator
said first-quarter operating cash flow grew 27.5% thanks to strong subscriber growth and improvements at its QVC home shopping network. On an operating basis, the company earned $808.2 million, up from $634.2 million the previous year, topping the consensus estimate of $775.1 million. Revenue for the quarter rose 20% to $2.67 billion. Comcast gained 11.4% to $29.79.
In the retail sector,
reported a 28.6% rise in first-quarter earnings and raised its second-quarter sales and earnings forecasts, citing improved margins. Shares of the footwear and handbag maker traded up 3.7% to $28.
Elsewhere on the earnings front, auto dealer
United Auto Group
reported a substantial increase in quarterly earnings, citing increased sales of both new and used cars, and the company's shares were up 7.3%. Gold mining company
missed first-quarter earnings estimates and lowered its guidance for the full year, but the stock still rose to $20.58, a 52-week high. Meanwhile, energy services provider
, the parent company of utility company Pacific Gas & Electric, was off a penny at $23.49 after posting a first-quarter profit.
said Tuesday it's ending the interest-free financing policy for all new automobile loans, and the automaker scaled back discounts on its top-selling models. GM and the other members of the Big Three,
, also reported their
monthly auto sales, which were basically better than expected. Shares of all three companies were higher following the April reports.
A number of high-profile companies have been announcing executive changes during the past two days, and the latest is
. Sun fell 15% to $6.97 on extremely heavy volume after its chief operating officer, Ed Zander, said he will retire from full-time duties with the company. Almost 266 million shares of Sun changed hands during the trading day.
Sun's news came after the departure of chief executives at
and the resignation of another manager at
, which has lost several top people in the past two years.
was the biggest percentage loser on the Nasdaq a day after the company said it will
delay the release of its fourth-quarter financial results because new auditor KPMG needs more time to complete the work taken over from Arthur Andersen. Shares of the software maker plunged 50% to $3.45, setting a 52-week low.
Another one of the day's biggest losers was
, which was being pummeled after the pay-per-click search engine
lost an affiliation pact with
AOL Time Warner's
America Online unit. Overture also raised its guidance, but investors weren't interested, as they sent its shares down 36% to $21.99.
U.S. Treasury issues were higher after the government announced its quarterly refunding package. Around 4 p.m. EDT, the 10-year note was up 5/32 to 98 18/32, yielding 5.06%. The long-term bond was the strongest issue.
Overseas markets were mixed. London's FTSE 100 was down 0.8% to 5126, while the rest of Europe's markets were closed for May Day. Japan's Nikkei 225 finished up 0.5% at 11,553, and Hong Kong's Hang Seng rose 1.2% to 11,498.