Financial Stocks Lead Wall Street Upward
Stocks in New York finished higher Thursday as investors took heart in a recovering U.S. dollar, improving jobless numbers and relatively positive news out of the financial sector.
The
Dow Jones Industrial Average
was off its best level of the day, but still closed up 83 points at 12,847. Earlier, the index had taken a brief dip into the red amid some discouraging news on the corporate side. The
S&P 500
rose 9 points to 1389, and the
Nasdaq Composite
climbed 24 points to 2429.
The market started off on an upbeat note after the Labor Department reported that the number of people filing for unemployment benefits dropped by 33,000 people last week to a better-than-expected 342,000. The consensus called for an unchanged figure.
Peter Cardillo, chief market economist with Avalon Partners, believes the data had a part in boosting the U.S. dollar, which eventually translated into an equities rally as it helped cool down the recent surge in oil prices.
The Real Story Wrap: April 24 |
var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 1519670799; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8); |
The greenback was rising 1.5% against the euro at $1.5682, and it firmed by 0.9% against the yen. Simultaneously, crude oil was down $2.10 to $116.06 a barrel. Gold futures were sliding, as well, losing $19.60 to $889.40 an ounce.
"The weak dollar seemed to be hanging over the market along with oil prices, and with good reason," said Bill Stone, chief investment strategist with PNC Wealth Management. "Oil remains stubbornly high, but at least we got a break from it."
He pointed out that the market's surge comes even as futures are pricing in a 20% chance that next week's
Federal Reserve
meeting will yield no interest-rate easing at all. Just last week, he noted, futures were indicating a 100% chance of at least some change.
TheStreet Recommends
"I almost think the market would seem to be okay with no cut, that we'll be all right," he said. "We were in such a crisis mode, and a good number of people were looking for financial Armageddon. I don't think that anyone's looking for that now."
On the corporate front, helping intensify buying pressure was
Merrill Lynch's
(MER)
announcement that the investment bank is keeping its dividend steady at 35 cents a share, bolstering the hope that financials have endured the worst of the credit crisis and are now primed for recovery. Merrill shares were up 8.5%.
Also, insurers were rallying after
Aflac
(AFL) - Get AFLAC Incorporated Report
and
Travelers
(TRV) - Get The Travelers Companies Inc. Report
each beat Wall Street projections and lifted the bottom end of their respective full-year forecasts. Both were up around 4.5%.
However,
Aetna
(AET)
was shut out of the rally after reporting a sinking -- though in-line -- first-quarter profit. The insurer also reaffirmed its full-year guidance, which comes in a penny below consensus. Shares began higher but were recently off 1.7%.
Also among the strong insurance names was Dow component
American International Group
(AIG) - Get American International Group Inc. Report
, which climbed 7.6% to become one of the index's best-performing components.
The Dow also got support from
General Motors
(GM) - Get General Motors Company Report
, which was lately up 7.6% after rival
Ford
(F) - Get Ford Motor Company Report
posted a surprise first-quarter profit of $100 million. The carmaker said a robust showing in Europe and South America offset a loss in its North American segment, which itself was narrowed sharply from last year. Ford shares bounded up 12.9%.
Commodities names were losing ground in the wake of falling oil and gold futures.
ConocoPhillips
(COP) - Get ConocoPhillips Report
reported crushing Wall Street targets with earnings of $4.1 billion, or $2.62 a share, thanks to advancing oil futures. But the stock was still losing 1.6%.
Rivals
Exxon Mobil
(XOM) - Get Exxon Mobil Corporation Report
and
Chevron
(CVX) - Get Chevron Corporation Report
gave up 1.3% and 1.5%, respectively.
Meanwhile, gold miners
Goldcorp
(GG)
,
Barrick Gold
(ABX)
and
Kinross Gold
(KGC) - Get Kinross Gold Corporation Report
each sank 3.7% or more.
Back among financial winners,
Credit Suisse
(CS) - Get Credit Suisse Group American Depositary Shares Report
gained ground, as well, despite posting its first shortfall in more than five years as it wrote off $5.14 billion in bad assets. That pales in comparison to writedowns at Swiss rival
UBS
(UBS) - Get UBS Group AG Registered Report
, and Credit Suisse called its capital position "strong," suggesting it won't need to raise any cash, as UBS was forced to do this month. Credit Suisse shares rose 5.1%.
T. Rowe Price
(TROW) - Get T. Rowe Price Group Inc. Report
was also among the big financial winners, adding 11.9%, after the asset manager said first-quarter earnings grew by 6% to $151.5 million despite broader economic troubles. Per-share income missed expectations by a penny.
The
NYSE
Financial Sector Index was surging 2.5%, and the KBW Bank Index rocketed 4.6%.
Further, tech titan
Apple
(AAPL) - Get Apple Inc. Report
recovered from early losses, gaining 4.2%, after the company saw its profit jump 36% to comfortably beat analyst estimates. Shares were down earlier as investors reacted to weak guidance for the current quarter.
Away from earnings, Arby's franchiser
Triarc Cos.
(TRY)
finally agreed to buy
Wendy's
(WEN) - Get Wendy's Company (The) Report
for about $2.34 billion in stock, following months of discussion on that possibility. Wendy's stock was recently up 3.1%, and Triarc tacked on 1.9%.
On the losing side,
Amazon.com
(AMZN) - Get Amazon.com Inc. Report
fell 1.2% after the online retailer eased its 2008 operating-earnings forecast and reporting an essentially flat operating margin in the first quarter. Analysts were hoping for some improvement. The Internet retailer also reported better-than-expected earnings of $143 million on soaring sales of $4.13 billion.
Also, cell phone maker
Motorola
(MOT)
surrendered 1.6% after its quarterly loss and weak second-quarter projection.
Outside of tech,
Starbucks
(SBUX) - Get Starbucks Corporation Report
was also losing ground on its soft guidance. The coffee seller said tough economic conditions should keep its customer-traffic numbers down and force a first-quarter profit drop to 15 cents a share from 19 cents last year. That's well under the consensus estimate. Shares were plunging 10%.
Back on the economic docket, the Census Bureau said new-home sales in March sank 8.5% from the prior month to a 526,000 annual pace. A number more on the order of 580,000 had been anticipated.
Paul Mendelsohn, chief investment strategist with Windham Financial, believes that those dismal numbers may have had a part in temporarily taking down the indices this morning.
Durable-goods orders -- an important indicator of factory activity -- stepped back 0.3% last month, according to the Commerce Department. That's worse than the flat number economists were expecting, but still an improvement on February's figure, which itself was revised to a 0.9% drop from the prior figure of minus 1.7%.
Treasury prices took a slide as investors moved their funds into equities. The 10-year note was down 23/32 in price to yield 3.82%, and the 30-year bond gave up 26/32 in price, yielding 4.54%.
Markets overseas were mixed. The Hang Seng Index in Hong Kong jumped 1.6% overnight at 25.681, but Tokyo's Nikkei 225 lost 0.3%. In Europe, London's FTSE 100 dropped 0.5% and the Paris Cac shed 0.3%. Germany's Xetra Dax added 0.4%.
