Thursday's Market: High Hopes for Chips Help Dow, Nasdaq Close Higher - TheStreet

Stocks pushed higher on a low-volume day, as the market prepared for the midquarter update from

Intel

(INTC) - Get Report

after the close of regular trading.

Ahead of Intel's earnings update, investors were encouraged by reports that suggest the semiconductor sector's cycle may have bottomed. Chip stocks surged after a report from the

Semiconductor Industry Association

today said the industry will rebound in the second half of this year and

National Semiconductor

(NSM)

said that the worst bookings quarter may be in the rear-view mirror.

The

Nasdaq Composite finished ahead 46 points, or 2.1%, to 2264, shaking off another splash in the confessions bucket from communications chipmaker

Broadcom

(BRCM)

late yesterday. Like the index on which it trades, Broadcom closed up 13.1% to $40.24.

"The stock

was rewarded by people who think this is the worst," said Jay Meagrow, vice president of trading at

McDonald

. Wall Street awaits confirmation from Intel, an industry bellwether. Over the past three quarters, Intel has warned of revenue shortfalls in similarly timed updates. The chipmaker ended up 4.4% to $31.14. The

Philadelphia Stock Exchange Semiconductor Index

jumped 7.7%, making it today's strongest sector on the stock market.

The

Dow Jones Industrial Average, which spent more than half of the day below the flatline, ended the day up 21 points, or 0.2%, to 11,090.74.

Philip Morris

(MO) - Get Report

was the biggest drag on the index, falling 3% to $48.52. A Los Angeles court yesterday ordered the tobacco giant to hand over more than $3 billion to a 56-year-old man with lung cancer.

The broader market

S&P 500 slipped 7 points, or 0.6%, to 1276.96. As a group, retailers advanced modestly, despite mixed May

same-store sales numbers released this morning by a bevy of retailers. The

S&P Retail Index

rose 1.2%. Blue-chip stock

Wal-Mart

(WMT) - Get Report

, which posted an increase in sales (but the results were at the low end of expectations), inched up 0.7% to $51.10.

So far this confession season, earnings news from big corporate fish has been weighted to the downside.

Sun Microsystems

(SUNW) - Get Report

last week warned it would miss its second-quarter targets.

Hewlett-Packard

(HWP)

cautioned that a global slowdown in information technology could hurt its revenue.

J.P. Morgan Chase

(JPM) - Get Report

yesterday said its expects trading revenue for the next three quarters to be weaker than first-quarter results because of poor market conditions.

But investors have been concentrating on an earnings bottom and on some good news. Earlier this week, chipmaker

Xilinx

(XLNX) - Get Report

and telecommunications equipment provider

Lucent

(LU)

made positive affirmations about the state of their finances.

In April and early May, investors bet that corporate earnings would begin accelerating again in the third quarter of this year, and they bid stocks up significantly. The Dow is up 18.1% from its March 22 low of 9389.48, while the Nasdaq is ahead 38.1% from its April 4 low of 1638.80. But a consensus now seems to be forming that a recovery won't happen until the fourth quarter of this year or early next year.

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International

European markets were mixed. The London

FTSE 100

gained 46.8 to 5948.3, the Paris

CAC-40

fell 43.1 to 5453.4, and Frankfurt's

Xetra Dax

lost 8.2 to 6185.3.

Late-day rebounds in both Hong Kong and Tokyo allowed major market averages there to close higher overnight. Tokyo's

Nikkei 225

ended up 102.67 points, or 0.78%, while Hong Kong's

Hang Seng

closed up 127.42 points, or 0.94%.

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