With traders (and reporters) wistfully eyeing the forthcoming holiday weekend, stocks fell early, then rallied midday before lurching into the close. The Dow Jones Industrial Average closed off 0.3% to 8670.99, after trading as low as 8558.02 in the early going and as high as 8742.01 at midday. The S&P 500 finished down a fraction to 917.80 vs. its apex of 924.59 and nadir of 903.33. The Nasdaq Composite, the relatively strongest performer throughout the session, finished up 1.6% to 1335.77 after having traded as low as 1295.79 and as high as 1345.47. A number of stock-specific issues weighed on sentiment early in the day, including:
Lehman Brothers' estimate cut of General Electric (GE), which finished down 3% and was the second-biggest drag on the Dow, behind Procter & Gamble (PG). Morgan Stanley's downgrade of Micron Technology (MU), which slid 3.3%. J.P. Morgan's downgrade of Kroger (KR), which fell 5.9%. A profit warning by Roadway (ROAD), which fell 14.2% and helped drag the Dow Jones Transportation Average down 2.9%. On the macro front, the government reported that weekly jobless claims rose to 403,000, the highest level since the week of July 6 and well above expectations of a dip to 387,000. Separately, the Commerce Department did not revise its initial report that second-quarter GDP rose 1.1%. Those developments helped push major averages down early in the session, and that in turn weighed on the dollar. The Dollar Index fell 0.49, to 106.73, but above its intraday low of 106.32. The stock market's recovery from its early decline -- the final-hour swoon notwithstanding -- was attributed to a combination of month-end "window dressing" by mutual funds and the thinness of trading in a preholiday atmosphere. About 1.16 billion shares traded on the NYSE, or 26% below the three-month daily average, according to Bloomberg. Just over 1.2 billion shares traded over the counter. There was also (dare I say it?) bargain hunting, an overworn phrase I'm loath to use. But it certainly seemed as if speculators were interested in shares of some previously beaten-down names today, especially in technology. Notably, the Philadelphia Stock Exchange Semiconductor Index closed up 0.2% to 304.33 after having traded as low as 293.17. The SOX, which had fallen more than 16% from Aug. 19 through yesterday, overcame not only Micron's fall but a UBS Warburg downgrade of chip-equipment makers, including Novellus ( NVLS), which rose 0.5% to $24.29 after trading as low as $23.14, and Lam Research ( LRCX), which ended up 0.3% to $11.95 vs. its low of $11.04. (After the close Sun Microsystems ( SUNW) issued some cautious comments about its quarter. So did Novellus, which issued a warning about its third-quarter results, raising questions about the wisdom of today's buyers.) Separately, Microsoft ( MSFT) rose 2.4% to $50.58 after trading as low as $48.50 despite Goldman Sachs lowering its price target to $60 from $70. Goldman also eliminated its targets on Oracle ( ORCL) and Siebel Systems ( SEBL), but shares of each ended higher. The Comp's climb was also aided by a Merrill Lynch upgrade of Yahoo! ( YHOO), which rose 11.9%. The Nasdaq 100 gained 1.8% to 961.69 after trading as low as 926.61.