Updated from 4:20 p.m. EDT
Stocks in New York stayed strong through the finish Thursday as a rally in technology and a relatively positive manufacturing report helped investors look past a series of otherwise disappointing economic data.
Dow Jones Industrial Average
had a shaky start, but shook off early losses to close up 94.28 points, or 0.73%, to 12,992.66. The
climbed 14.91 points, or 1.06%, to 1423.57. The tech-heavy
enjoyed a particularly good day, tacking on 37.03 points, or 1.48%, to 2533.73, as component
surged on buyout news.
In spite of that move, market sentiment was bearish at the open, but investors perked up after Northeastern factory activity data showed vast improvement. The Philadelphia Fed Index came in at negative 15.6 for May -- still a contraction, but far less egregious than last month's decline of 24.9, and better than the economists' consensus for negative 19.
The Real Story Wrap: May 15
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"Overall the survey is soft," said Ian Shepherdson, chief U.S. economist with High Frequency Economics, in an emailed statement, "but its weakness has not been fully reflected in the one industrial survey that really matters, the
Institute for Supply Management report."
The ISM dispatches monthly nationwide manufacturing numbers, and its next installment is due on June 2.
Shepherdson added that the
industrial output numbers show that "manufacturing is now struggling, though it is certainly not in meltdown." The report revealed that industrial production fell 0.7% in April, worse than the 0.3% decline that had been expected. March was revised to show an increase of only 0.2%, rather than the 0.3% uptick that had been reported.
Still, said Tony Crescenzi, chief bond strategist at Miller Tabak and contributor to
, a sister site to
, those production numbers are "not a major surprise."
"April's drop overstates the impact of the economy on output, as strikes in the automobile sector shaved three-tenths of a percentage point from total output," Crescenzi wrote. He also cited the fact that April saw a large 1.2% decline aggregate hours worked in the manufacturing sector.
Shepherdson further noted that the declines were broad, even stripping out car production: consumer goods, materials, construction supplies and business equipment, he pointed out, all sustained drops. "The dollar value of business equipment produced -- a key indicator of capital spending -- fell a hefty 1.8%, after being flat for the past three quarters or so," he added. "Further declines would be very worrying."
Capacity utilization was also a bit light, coming in at 79.7% compared with the 80.1% consensus forecast.
Meanwhile, New York factory data -- the Empire State Index -- registered at negative 3.2 for May, down from a slight uptick in April and worse than break-even expectations
Elsewhere on the economic docket, jobless claims were roughly in line with expectations, rising by 6,000 to 371,000. That was about 1,000 more than had been predicted.
Stocks' breadth was positive. Roughly 1.90 billion shares changed hands on the
New York Stock Exchange
, with advancing issues outrunning decliners by a 7-to-3 margin. Volume reached about 2.20 billion shares on the Nasdaq as winners beat losers 3 to 2.
On the corporate front,
would buy Internet media company CNET for $1.8 billion. That news lifted CNET by 43.5%, but CBS was slipping 2.4%.
, a component of the Dow, is considering selling or parting ways with its appliances division, according to
The Wall Street Journal
. The unit could fetch $5 billion to $8 billion, the report said. Still, after a brief rise out of the gate, shares closed off 14 cents to $32.37.
Also, billionaire investor Carl Icahn has
moved to replace 10 directors
board, telling chairman Roy Bostock in a letter that the company "acted irrationally and lost the faith of shareholders" in turning down
sweetened takeout offer. Recently, reports surfaced that Icahn had begun acquiring large amounts of Yahoo! stock.
Earlier this month, Microsoft upped its bid for the Internet-portal operator by $5 billion in a last-ditch attempt to prod Yahoo! into agreement. But Yahoo! remained defiant, so Microsoft, which had first proposed the combination in February, finally
dropped the offer
. Yahoo! shares finished ahead by 2.6%.
Also in the tech space,
shares leaped 8.7% a day after CEO Diane Greene
on the firm's place in the virtualization-software business, even against the likes of Microsoft, at VMware's first annual meeting as a public company.
, VMware's majority owner, climbed 6.7%.
Elsewhere, Britain-based bank
reported a $1.94 billion writedown and saying its first-quarter profit had withered from last year. Shares ended down 8 cents at $33.23.
said its first-quarter income plunged by 50% from a year earlier, and the retailer predicted that 2008 will be a difficult year. Still, shares were up 4.7%.
In notable analyst calls, Friedman Billings upped
to market perform from underperform, and Needham raised flash-memory card maker
to buy from hold. Dow component
, an oil-and-gas giant, was upgraded to buy at UBS.
TiVo shares jumped 6.9%, SanDisk moved up 5.4%, and Chevron added 1.5%.
Back on the data side, the U.S. Treasury said net foreign purchases of long-term securities totaled $80.4 billion, up from a downwardly revised $64.9 billion in the prior month.
Among commodities, crude oil had a volatile day, reaping big gains early on before pulling back sharply, then settling down just 12 cents at $124.12 a barrel. Also, gas prices at the pump continued their relentless climb, with the nationwide average hitting yet another new high of $3.776.
Gold futures added $13.50 at $880 an ounce. The U.S. dollar nudged higher against the euro to settle at $1.5452, but lost 0.5% to the yen at $1.5452.
Treasury prices were jumping. The 10-year note lifted by 23/32 in price to yield 3.82%, and the 30-year bond was up 29/32 in price, yielding 4.56%.
Markets abroad were mixed. In Asia, Tokyo's Nikkei 225 added 0.9% overnight, but the Hang Seng Index in Hong Kong slipped 0.1%. As for European bourses, London's FTSE 100 climbed 0.6%, and the Paris Cac closed marginally higher. Germany's Xetra Dax was slightly lower at 7081.