Thursday's Market: Dow Gets Back Above 9000

Updated from 4:02 p.m. EDT

Stocks had another choppy session Thursday, but by the end of trading blue-chips and tech stocks had collected solid gains, and the Dow Jones Industrial Average finished above the 9000 level for the first time since early July.

Closing numbers showed the Dow up 96.41 points, or 1.1%, to 9053.64. The Nasdaq added 13.70 points, or 1%, to 1422.95, and the S&P 500 gained 13.34 points, or 1.4%, to 962.70. Strength in Microsoft ( MSFT) following an upgrade and a few other names helped the Dow stay on the upside.

The Dow has risen more than 15% from the low it hit in late July, and the rally has raised red flags among market technicians and fundamental analysts alike.

Some had pointed to the Dow's encroachment on 9000 as a reason for near-term concern. And analysts at Credit Suisse First Boston reduced their recommended equity allocation to 62% from 65% Thursday, saying much of the upside from recent lows is already priced in.

Throughout Wednesday's session, Federal Reserve officials delivered upbeat assessments of the U.S. economy, reducing prospects for an imminent interest rate cut but encouraging investors who had worried about a double-dip recession. Among the cheerleaders was Chicago Fed President Michael Moskow, who said the central bank was under no obligation to "smooth out every bump" in the economy.

Philadelphia Fed President Anthony Santomero predicted the economy could grow at 3% to 4% annually "on a sustained basis" because of improved productivity, which could "provide a strong incentive for businesses to increase their investments in new technologies."

The news Thursday included two research calls from Salomon. The brokerage reduced its forecast for growth in the semiconductor industry to nearly flat this year, and upgraded Microsoft to outperform from neutral. Microsoft gained 1.8% to $53.23 on the news.

Among other Dow components, Home Depot ( HD) was up 3.6% to $33.86, ExxonMobil ( XOM) rose 1.6% to $37.03, and Hewlett-Packard ( HPQ) gained 4.1% to $15.30.

Intel ( INTC) was the Dow's biggest percentage loser, down 2.3% to $19.15.

A handful of retailers, including Williams-Sonoma ( WSM), Claire's Stores ( CLE) and Limited ( LTD), posted results that beat expectations, as did optical component maker Ciena ( CIEN), albeit on lower-than-expected revenue.

Retailers as a group inched higher, as the Dow Jones U.S. Retail Index tacked on 0.9%.

Barnes & Noble ( BKS) said it earned $1.4 million, or 2 cents a share, for the second quarter ended Aug. 3, compared with a year-earlier loss of $1.7 million, or 3 cents a share. Analysts had predicted earnings of 10 cents a share. The company cited a 15-cent loss from investments, including a magazine and a magazine subscription business. The shares were down 2% to $22.93.

The lone economic report came from the Labor Department, which said the number of people filing first-time jobless claims was 389,000 last week, about 4,000 more than expected.

Treasuries were weaker around 4 p.m. EDT, with the 10-year note losing 28/32 to 100 16/32, yielding 4.311%. The 30-year bond was down 1 5/32 to 104 8/32 and yielding 5.091%.

Stocks were higher overseas. London's FTSE 100 closed up 1.6% at 4435, and Germany's Xetra DAX rose 1% to 3907. In Asia, Japan's Nikkei rose 1.8% to 9814, and Hong Kong's Hang Seng added 0.2% to 10,424.

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