Stocks Gain Slightly in Light Trading

Investors sit it out ahead of Friday's employment report.
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Updated from 4:04 p.m. EDT

Stocks held on to slight gains in light trading Wednesday, with tech issues outperforming blue-chips, as investors returned to their wait-and-see approach following Tuesday's comments from the

Federal Reserve

and ahead of Friday's jobs data.

The

Nasdaq Composite

led gains, closing up 6.78 points, or 0.35%, to 1957.26, with a boost from biotech and semiconductor stocks. The Nasdaq Biotech Index rose 1.5%, while the Philadelphia Semiconductor Index finished up 0.9%.

The

Dow Jones Industrial Average

shed 6.25 points, or 0.06%, to 10,310.95; and the

S&P 500

was up 2.03 points, or 0.18%, to 1121.58. The 10-year Treasury note traded down 5/32 in price to yield 4.59%, while the dollar was lower against the yen and euro.

Volume approached 1.5 billion on the

New York Stock Exchange

, with advancers and decliners even on the session. Nearly 1.6 billion shares changed hands on the Nasdaq, where advancers held about a 5-to-4 edge over decliners.

The move higher by the broader market further entrenched the indices into their recent trading range. Collin Monserrat, a trader at Birinyi Associates, measures the recent range on the S&P at a high of about 1160 and a low end of 1091. "We're getting down near the bottom of that range," he said. "I'm not sure we're going to go back down to the lows or not, but I expect the market to move around in that range for, quite possibly, some time as it works off some of the recent gains. Eventually, it will move higher."

The market pushed initially higher Wednesday after the Institute for Supply Management said its services index jumped to 68.4 in April, up from 65.8 in March and above the consensus estimate of 65. But the move wasn't sustained.

"This is one more in a series of significant signals that the economy is improving," said Michael Sgro, an equity manager at Chase Personal Financial Services. "The market's not reacting to this news because investors are just treading water until Friday's employment report. Employment has been the missing link here, and people need confirmation after last month's strong report that we have a positive trend forming here."

Economists expect the government to report Friday that nonfarm payrolls added 175,000 new jobs, down from the 308,000 recorded in March. The unemployment rate is expected to stay put at 5.7%.

"If we get confirmation of an improving job market, I think a June rate hike by the Fed will have more likelihood than August, but right now most people have their bets on August," Sgro said. He acknowledged that predicting the market's reaction to Friday's report is tricky, because while confirmation of a healthy job market would be good news, it could also mean rate tightening could come earlier from the Fed, and that could inspire a negative reaction on Wall Street. Conversely, a less-than-stellar report could bring new skepticism about the sustainability of economic growth, but may also prolong the central bank's accommodative stance. "Bonds would rally on that, that we have more time baked in," he said.

On Tuesday, the FOMC left its fed funds target at 1% while continuing to lay the groundwork for an interest rate hike, possibly as early as June. Still, its language continued to be cautious, all but ruling out the possibility of a tightening during the intermeeting period.

"The committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal," the FOMC said in its statement. "Similarly, the risks to the goal of price stability have moved into balance. At this juncture, with inflation low and resource use slack, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured."

Along with inflation, high oil prices nagged Wednesday's market. Oil futures traded on the Nymex were recently up 1.8% to $39.70 a barrel after setting a new 13-year high amid supply concerns stoked by a Department of Energy report that showed inventories rose less than expected last week, as well as a weekend bombing in Saudi Arabia and continuing violence in Iraq.

The Bush administration said late Wednesday it will ask Congress for an additional $25 billion for U.S. operations in Iraq and Afghanistan, according to the

Associated Press

. President Bush called the treatment of Iraqi prisoners by some members of the U.S. military "abhorrent" in two separate interviews with Arab-language TV stations, while the military launched its first major assault against insurgents led by Moktada al-Sadr, a rebel Shiite cleric, in two cities in southern Iraq.

In corporate news,

Coca-Cola

(KO) - Get Report

named former executive E. Neville Isdell to the positions of chief executive and chairman late Tuesday to succeed Douglas Daft, who is retiring. Isdell, a 60-year-old Irish citizen, joined Coke in 1966 and was eventually named president of the company's Greater Europe Group, which comprised territories accounting for nearly one-third of Coke's worldwide profits. He left the company in 1998 to serve as chairman of

Coca-Cola Beverages

, a company that went public the same year. Its stock closed up 87 cents, or 1.7%, to $51.14.

Charter One Financial

(CF) - Get Report

shares rose $7.93, or 22%, to $43.88 after it announced Tuesday evening that it will be acquired by the

Citizens Financial

unit of the

Royal Bank of Scotland

(RBS) for about $10.5 billion. The price comes out to about $44.50 a share, more than $9 higher than Charter One's Tuesday close.

Shares of

Dell

(DELL) - Get Report

added 40 cents, or 1.1%, to $35.71 after Banc of America upgraded the computer giant, citing "new-found enthusiasm" about its earnings.

In earnings news, drugstore chain

CVS

(CVS) - Get Report

said first-quarter earnings were $244.6 million, or 59 cents a share, up from $196.3 million, or 48 cents a share, last year. The latest quarter's results were about 3 cents a share better than analysts' forecast. Its stock closed up 59 cents, or 1.5%, to $40.58.

Also,

Orbitz

(ORBZ)

beat expectations on an operating basis in its first full quarter as a public company, posting a profit of $1.9 million, or 4 cents a share, compared to last year's loss of $2.4 million, or 7 cents a pro forma share. Excluding $1.4 million in noncash compensation charges, the online travel and reservations company earned 7 cents a share, 4 cents above the consensus estimate reported by Thomson One Analytics. Its stock closed down $1.98, or 7.3%, to $25.02.

Overseas markets were mixed, with London's FTSE 100 closing up 0.5% to 4568 and Germany's Xetra DAX adding 0.8% to 4023. In Asia, Hong Kong's Hang Seng fell 1.2% to 11,950, while Japan's markets remained closed for a holiday.

More than 30 companies will report first-quarter results before Thursday's opening bell as earnings season winds down, including

News Corp.

(NWS) - Get Report

,

Fox Entertainment

(FOX) - Get Report

,

EchoStar

(DISH) - Get Report

and

Devon Energy

(DVN) - Get Report

.

At 8:30 a.m. EDT, the Labor Department is expected to say initial unemployment claims dropped to 335,000 for the week ended May 1, down slightly from 338,000 reported for the previous week.