Updated from 4:04 p.m. EST
Tech stocks bounced back Thursday, erasing the previous session's decline, as semiconductor investors found new confidence after a blowout quarter at
Advanced Micro Devices
. Blue chips posted smaller gains.
closed up 22.17 points, or 0.97%, to 2301.81, paced by chip and chip-related components like
, which shot up 13.4% after reporting a strong quarter. The Philadelphia Semiconductor Sector Index rose 3.1%.
New York Stock Exchange
-listed Advanced Micro rose 11.3% after posting fourth-quarter sales and earnings that wiped out analyst estimates on a 35% rise in microprocessor sales. The impressive performance helped investors look past guidance issues at
"With the bounce-back in tech stocks today, at this point investors view the
sector as half-full," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "Some of the disappointments earlier this week are now viewed as company-specific rather than emblematic of the entire sector."
Dow Jones Industrial Average
added 25.85 points, or 0.24%, to 10,880.71, having gone as high as 10,915, while the
rose 7.11 points, or 0.56%, to 1285.04.
About 1.77 billion shares traded on the
New York Stock Exchange
, with advancers beating decliners by a 6-to-5 margin. Trading volume on the Nasdaq was 2.31 billion shares. Twice as many stocks rose as fell.
"We weathered a near-term storm of the recent tech earnings well," said Barry Hyman, equity market strategist with Ehrenkrantz King Nussbaum. Still, Hyman warned, more weakness is likely if earnings continue to disappoint. "The market has a lot of consolidating to do, and there isn't a catalyst for serious upside at the moment. Only quality earnings amongst all sectors will help us."
The 10-year Treasury bond was down 10/32 in price to yield 4.37%, matching the yield of the two-year note, while the dollar rose against the yen and euro.
To view Gregg Greenberg's video take on today's market, click here
Oil prices ended higher despite Energy Department data that showed big builds in crude, distillate and gasoline inventories. February crude rose $1.10 to $66.83 a barrel, after losing 58 cents on Wednesday. Natural gas futures gained 21 cents to $8.90 per million British thermal units.
said fourth-quarter earnings eased 3% from a year ago to $2.73 billion, or 37 cents a share, while sales fell 9% to $13.59 billion. Adjusted earnings of 51 cents a share, however, were 9 cents better than expected, reflecting stronger-than-expected sales of some new drugs and cost-cutting. Pfizer tacked on 88 cents, or 3.7%, to $24.97.
also topped estimates, reporting earnings of 67 cents a share before a charge, 2 cents better than expected. Sales rose 15% to $12.05 billion, beating forecasts for $11.7 billion. Shares gained 25 cents, or 0.4%, to finish at $61.47.
Late Wednesday, Apple said first-quarter earnings rose 92% to $565 million, or 65 cents a share, while sales rose 65% to $5.75 billion. Both numbers easily beat analyst forecasts. But Apple also said it expects to earn 38 cents a share on sales of $4.3 billion in the second quarter. Analysts wanted 48 cents a share and $4.6 billion, on average. Apple slid $3.45, or 4.2%, to $79.03.
At eBay, the fourth-quarter pro forma profit came in at 24 cents a share on sales of $1.33 billion. Analysts surveyed by Thomson First Call were expecting 22 cents a share on sales of $1.29 billion. But eBay put its 2006 pro forma EPS at 96 cents to $1.01 on sales of $5.7 billion to $5.9 billion. Analysts wanted $1.02 a share on $5.9 billion. Shares of eBay rose $2.32, or 5.2%, to $46.76.
The disappointing profit forecasts followed similarly anemic outlooks from
. Those estimates sent the Nasdaq Composite down 1% in Wednesday's session and brought its two-day loss to 1.6%. The Dow and S&P 500 both lost about 0.4% on Wednesday.
On the economic front, the Commerce Department said that housing starts for December unexpectedly fell to 1.93 million annualized units from 2.12 million in November. Economists expected a smaller decline, to 2.05 million units in December. Also ,first-time jobless claims came in below forecasts while the Philly Fed survey came in far below expectations.
"One steep drop in housing starts does not make a downward trend, especially in a month which was very wet in the West and very cold in the Northeast," said Ian Shepherdson, chief economist with High Frequency Economics. "Still, the data are consistent with other signs of a softening housing market, most notably the drop in homebuilders' confidence. What really matters, though, is whether sales will fall fast enough to turn a softening into a collapse."
Thursday morning, brokerage
reported fourth-quarter net income of $1.5 billion, or $1.51 a share, up from $1.19 billion, or $1.19 a share, a year earlier. Revenue rose to $6.78 billion from $5.91 billion a year ago. Results handily beat the Thomson First Call consensus for EPS of $1.30. Merrill also raised its quarterly dividend by 25% to 25 cents a share. The stock gained $2.20, or 3.2%, to $72.05.
posted fourth-quarter net income of $1.71 billion, or $1.09 a share, up from $1.45 billion, or 95 cents a share, a year ago. Excluding items, earnings were $1.74 billion, or $1.11 a share, matching the Thomson First Call consensus. Wachovia was off 82 cents, or 1.5%, to finish at $52.81.
Two homebuilders issued solid earnings reports Thursday morning.
first-quarter earnings rose 29% from a year ago to $90 million, or $2 a share, while revenue rose 22% to $1.11 billion. Analysts had been forecasting $1.96 a share and $1.05 billion in revenue. Beazer rose $1.10, or 1.4%, to $78.69.
also posted a 29% rise in first-quarter earnings to $310.1 million, or 98 cents a share, while sales jumped 15% to $2.84 billion. Analysts were expecting earnings of 94 cents a share on sales of $2.98 billion. The company raised its 2006 earnings view to $5.25 to $5.35 a share from $5.22 to $5.32 a share. Shares were lower by 95 cents, or 2.4%, to finish at $38.86.
After the bell Wednesday, Advanced Micro Devices posted fourth-quarter earnings of $95.6 million, or 21 cents a share, compared with a loss of $30 million, or 8 cents a share, last year. Results included a charge of 24 cents a share related to the spin-off of its flash memory unit. Sales rose 45% to $1.84 billion from a year ago. The Thomson First Call consensus was for earnings of 26 cents a share on revenue of $1.67 billion. AMD surged $3.76, or 11.3%, to $37.13.
posted a fourth-quarter profit of $1.20 billion, or 47 cents a share, up from $647 million, or 26 cents, a year ago. Sales rose 18% to $10.43 billion.
Excluding items, Motorola earned 35 cents a share, a penny ahead of the consensus. However, the company was down 7% in the extended session after offering first-quarter guidance below expectations.
Away from earnings, a report in
The Wall Street Journal
is in serious talks to purchase
for $6.7 billion. The acquisition would make Pixar CEO Steve Jobs Disney's largest individual stockholder.
Pixar added $1.61, or 2.8%, to $58.87. Disney was up $1.02, or 4%, to close at $26.24.
raised its quarterly dividend to 15 cents from 10 cents and backed earnings and sales guidance for the year ending this month. Home Depot lost 41 cents, or 1%, to $41.28.
Among ratings moves, Piper Jaffray upgraded Dow component
to outperform from market perform, citing an increasingly better outlook for the company. McDonald's finished up 54 cents, or 1.6%, to $35.20.
On Friday, earnings reports are expected from
Japanese stocks staged a solid rebound overnight as the panic surrounding Internet company Livedoor faded. The Nikkei climbed 2.3% to 15,696, making up about a third of the loss it sustained in the days since prosecutors raided Livedoor on suspicions of malfeasance. Elsewhere, Hong Kong's Hang Seng gained 1.2% to 15,670, London's FTSE 100 was up 0.5% to 5693, and Germany's Xetra DAX added 0.7% to 5431.