Updated from 4:08 p.m. EST
Stocks finished marginally higher Thursday, with the tech sector enjoying a small rebound from Wednesday's deep losses, after softer, but largely positive, economic data and some strong retail sales results.
improved 24.81 points, or 0.2%, to 10,495.55; the
climbed 5.42 points, or 0.3%, to 2019.56; and the
rose 2.09 points, or 0.2%, to 1128.61.
Volume on the
New York Stock Exchange
was 1.57 billion shares, while 1.91 billion shares exchanged hands on the Nasdaq. Advancers edged decliners by about 5 to 4 on the Nasdaq and were close to even on the NYSE.
Initial jobless claims for the week ended Jan. 31 were a larger-than-expected increase to 356,000 from the revised reading of 339,000 in the week prior; economists had expected a marginal increase. However, claims have now spent 18 consecutive weeks under the key 400,000 level thought necessary for job market improvement.
Fourth-quarter productivity grew by 2.7%, after a revised 9.5% surge in the previous quarter; economists had expected productivity to grow by 3%.
"We would have liked the employment figures to have been better," said Bernadette Murphy, chief market analyst at Kimelman & Baird. "But they were not that bad."
Adolfo Rueda, a technical analyst at Shields, pointed out that several of the major averages are finding strong short-term support and are close to their most oversold levels in a year, which helps to explain the afternoon bounce.
Despite today's Nasdaq snapback, Murphy is nervous the tech-laden index could experience at least a 10% decline moving forward. However, "there is really good support at 1900."
Markets overseas finished mixed with London's FTSE 100 down 0.3% to 4384 and Germany's Xetra DAX off 0.3% to 4015. In Asia, Hong Kong's Hang Seng lost 0.4% at 13,030.9 and Japan's Nikkei gained 0.2% at 10,464.6.
The Bank of England hiked its main interest rate by a quarter of a percentage point to 4%, on concerns strong growth would trigger inflation. This comes just one week after the
altered its policy statement slightly, leading many economists to believe the FOMC was preparing the market for higher interest rates.
The 10-year Treasury note was down 15/32, yielding 4.17%, following positive comments on job growth from Fed Governor Ben Bernanke.
Elsewhere, the dollar was weaker vs. the euro, with the euro recently worth $1.2541. The U.S. currency strengthened vs. the Japanese yen, recently buying 105.90 yen.
Currencies: Reading Between the Lines
The major currency crosses have been range-bound in recent weeks, as foreign-exchange traders gear up for the upcoming meeting of finance ministers and central bankers from the Group of Seven nations. The conference will begin Friday in Boca Raton, Florida and last through Saturday.
There has been widespread speculation European and Asian officials will work to stem their currencies' sharp appreciation against the dollar to ensure their economies remain on track. U.S. Treasury Secretary John Snow, on the other hand, continues to stress the importance of letting currencies fluctuate freely in the market. Many have interpreted these comments as an implicit endorsement of a weaker dollar.
Since the G7 met in Dubai last September, "the dollar has fallen 10% in trade-weighted terms, prompting the leaders of the G7-ex U.S. to be more vocal about the impact of their appreciating currencies," according to a report issued Wednesday by Ashraf Laidi, chief currency analyst at MG Financial Group.
Laidi expects the finance leaders to compromise and issue a balanced official statement. "The six nations would want to place more weight on instilling currency stability, while the U.S. will once again press for market-based movements and flexibility, which is an implicit request for the Asian nations to let their currencies move more freely
i.e., rise against the dollar."
In other words, the U.S. would like to let the market take the dollar weaker, which is the likely outcome given the nation's ever-expanding trade and budget deficits. On the other hand, the Europeans and Japanese will stress currency stability; whether that is an endorsement of a gradual appreciation of their currencies or a call for verbal and outright intervention is unclear.
Laidi expects any ambiguities to become clearer after postmeeting comments. The real intentions of the statement "will depend on the post-meeting interpretations declared by the ministers and central bankers, especially commenting on post-meeting moves."
In the end, Laidi expects the U.S. to lose out and for the dollar to strengthen at least until the summer. "Resumed verbal intervention from the
European Central Bank
will provide leadership in supporting the dollar against the major currencies. We have already seen this three weeks ago, and we will likely see it again."
Laidi sees the euro trading at $1.2170 by the end of April and the dollar fetching 106 yen.
Level 3 Communications
said it had a third-quarter loss of 30 cents a share, excluding items, which was better than analysts' consensus for a loss of 32 cents a share. However, the company dampened revenue expectations, because AOL is cutting purchases as they reduce dial-up capacity. Level 3 stock lost 70 cents, or 12.5%, to $4.91.
said same-store sales grew by 5.7% in January, ahead of the consensus estimate of 4%; total sales were $18.4 billion. The stock climbed 86 cents, or 1.6%, to $56.25.
reported fourth-quarter earnings of 42 cents a share, which was 10 cents better than the Wall Street analyst consensus. Revenue increased 1%. The shares soared $2.25, or 6.5%, to $37.15.
And fourth-quarter earnings at
were 51 cents a share, a penny below analysts' 52 cents-a-share consensus. Sales rose 9.4%. The stock added 90 cents, or 1.9%, to $48.50.
stock rallied 14 cents, or 1.6%, to $8.70, benefiting from two analyst upgrades. Bear Stearns boosted the stock to outperform from peer perform, and Smith Barney Citigroup lifted the shares to buy from hold.
Looking ahead, the government will release its anxiously awaited January employment report at 8:30 a.m. EST Friday. Economists expect nonfarm payrolls to grow by 165,000 after posting a paltry gain of 1,000 in the prior month. In addition, the unemployment rate is expected to hold steady at 5.7%. Job growth has been elusive in the current economic upswing, as productivity gains, excess capacity and cost-cutting temper hiring.
Tomorrow's earnings calendar includes releases from