(Updated from 3:06 p.m.)
The major stock market indices closed higher after Wednesday's session snapped a six-day winning streak for technology stocks and cut into the blue-chip rally. Stocks were pressured earlier in the day by new data that showed home sales fell sharply last month.
Dow Jones Industrial Average gained 16.91 to 11,122.42, after being weaker for much of the day. The tech-heavy
Nasdaq Composite Index closed up 38.27 to 2281.75.
Shortly after 10 a.m. ET, market averages turned early-morning gains to losses after the release of a government report showed sales of new homes last month fell 9.5% from March, the largest percentage drop since 1997. The data sparked fears the economic slowdown could hit the housing market, which has held up well despite the domestic economic slowdown.
Earlier in morning, Wall Street had turned its attention to Capitol Hill. Just after the opening bell, Sen. James M. Jeffords, a Vermont Republican, confirmed his decision to leave the GOP to become an independent. The move gives the Democratic party operational control of the United States Senate. After the announcement, which lifted uncertainty about the balance of power in the Senate, stocks temporarily traded higher.
The news of Jeffords' party swap was publicized yesterday, and Wall Street analysts are torn over the impact it is having on stocks. Some say the move has pressured sectors that typically benefit from Republican-supported legislation. Along those lines, the
American Stock Exchange Pharmaceutical Index
was off 0.8%. But the
American Stock Exchange Tobacco Index
, which is typically expected to have an advantaged under GOP leadership, was lately up 0.8%.
Many traders and strategists say investors don't need an excuse to sell stocks, given their sharp rise over the past week. Ever since May 15, when the
Federal Reserve cut interest rates for the fifth time since the beginning of the year, Wall Street has bet the series of reductions will have a positive effect on the economy. The Dow crossed 11,000 last week, and the Nasdaq is trading back above a key technical level of 2200.
Stocks have been on a general up trend since early April. And as of yesterday's close, the Nasdaq is 37% higher than April 4, when it fell to a recent low of 1638.8. It's still 55.5% off its all-time high, however. The Dow is 18.3% above its two-year low of 9389.48 hit March 22 and 5.3% below its all-time high.
In other economic news,
initial jobless claims for the week ended May 19 rose 15,000 to 407,000, the government reported this morning. Economists were expecting a drop in the number of filings for unemployment. The Fed and market participants are closely watching the employment scene: The jobless rate climbed to 4.5% in April.
Wall Street awaits
Alan Greenspan's speech this evening on economic developments before the Economic Club of New York.
was one of the biggest movers today, jumping 38.2% to $24.27 and hitting a new 52-week high after consulting outfit
agreed to acquire it for $950 million and offered $170 million for the remaining stake of its Unigraphics Solutions division.
Among major market sectors, bank and PC stocks were gaining, while semiconductor, transportation, and cyclical stocks were falling.
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