Updated from 10:12 a.m. EDT
Stocks in New York were making their way higher Thursday as traders continued digesting the
rate-cut decision, while working past mixed economic data and disappointing corporate earnings.
Dow Jones Industrial Average
was up 46 points at 12,866, and the
climbed 7 points at 1393. The best performer was the tech-heavy
, which was rising 39 points at 2462 as big-caps
The market's upturn also represents a recuperation from Wednesday, when the major indices erased their gains after the Federal Reserve eased its benchmark lending rate by another quarter-point, but also seemed to leave the door at least slightly open to further cuts in the future.
"Yesterday was a short-term reaction, perhaps a myopic reaction, to what the Fed was doing," said Matt King, chief investment officer with Bell Investment Advisors. "Long term, we think it's definitely a positive. We were getting concerned the Fed was cutting too aggressively, that we were getting too much stimulus fiscally and monetarily."
In the currency market, the dollar was likewise recovering from the previous session's losses. The dollar surged by 1.2% against the euro to $1.5455, while also firming against the pound and the yen. The dollar index, which stacks the greenback against a basket of other currencies, jumped 1%.
But Meg Browne, senior currency strategist with Brown Brothers Harriman, doesn't believe the rally is based in a shift in sentiment.
"The market really got what it wanted. What we've had over the past couple of days was shorter-term players getting in a day or two and then getting out," she said, specifically referring to the greenback's action against the euro.
"Our view is that the Fed really is paused now, and what the market will react to is whether data point to not just a possible
economic contraction in the second quarter, but a sharp contraction. Today's data doesn't really give us that."
Indeed, investors had several reports to consider. The Institute for Supply Management said nationwide factory activity in April was unchanged from the prior month. The ISM index came in at 48.6, indicating a slight contraction, though that's a bit better than the 48 figure economists had expected. The index's break-even point is at 50.
The Labor Department said the number of people filing for unemployment benefits last week spiked by 35,000 from the prior week's revised data to 380,000. That's 20,000 more claims than economists were expecting. The report comes a day before the government releases its always important monthly report on job growth and the unemployment rate. On Wednesday, ADP said private employers added 10,000 workers to their payrolls in March, a stronger result than economists had predicted.
Meanwhile, March personal spending was 0.4% higher than the prior month and was slightly ahead of what was expected. Personal income rose 0.3%, compared with a 0.5% climb in the prior month. Also, March construction spending slid a steeper-than-anticipated 1.1% sequentially, reversing a revised 0.4% uptick in February.
Browne added that fundamentals on the euro side have also helped ease some of the dollar's pain as several eurozone countries suffer economic slowdowns. Though the process will be slow, she said, eventually the European Central Bank will be forced to cut its own interest rates amid that deceleration, which would be a boon for the greenback.
As the dollar strengthened, crude oil slid $1.89 to $111.57 a barrel, and gold shed $16.20 to $865.10 an ounce.
Among companies, Dow component
was an early drag on the market after its first-quarter earnings missed analysts' projections, despite surging 17% to $10.89 billion.
Revenue, though sharply higher, was also on the light side, and the stock was falling 4.2%.
roughly doubled its adjusted first-quarter profit to $326 million, or 67 cents a share, and was well ahead of the average analyst estimate from Thomson Financial. Still, shares were falling 4.3%.
slipped 2.4% even though same-store sales rose 3.9% as first-quarter earnings climbed to 55 cents a share, in line with expectations.
climbed 2.7% even though the coffee giant said 2008 earnings should come in lower than last year's 87 cents a share. For the first quarter, the company posted a bottom line that met Wall Street targets, though sales were a bit short.
said first-quarter income sank 12.5% amid declining subscription numbers, though the company's 19-cent profit per share matched the consensus estimate. Shares were higher by 5.8%.
Treasury prices were rising. The 10-year note and the 30-year bond were each adding 6/32 in price, yielding 3.71% and 4.46%, respectively.
As for overseas bourses, most major markets were closed for the May Day holiday. Tokyo's Nikkei 225 lost 0.6% overnight, and the FTSE 100 in London was up 0.2%.