Higher-than-expected jobless claims, sharp weakness in the dollar, and warnings from Albertson's ( ABS) and Roadway ( ROAD) weighed on a technically overextended market Thursday. But demand for shares remained keen and major averages finished in positive territory. After trading as low as 8969.24, the Dow Jones Industrial Average recovered to finish up 2.32 points at 9041.30. As has been the case for some time now, broader stock gauges fared better than the Dow; the S&P 500 rose 0.4% to 990.14 while the Nasdaq Composite gained 0.7% to 1646.01. Breadth improved as the day progressed, with advancing stocks besting declining issues by 4 to 3 in New York Stock Exchange trading and 19 to 12 in over-the-counter activity. At 1.7 billion and 2.4 billion shares respectively, volume remained robust although some said the activity dwindled in the afternoon, even as the averages drifted higher. "Put yourself in the shoes of an aggressive hedge fund or mutual fund trader," said Michael Driscoll, director of listed trading at Bear Stearns. "You sell some stuff early and, maybe super fast guys are short early, then buy later. Then everyone sits on their hands." Friday's employment report "has the potential to short-circuit the rally," and "if you caught any of this move, you want to nail down some profits," ahead of that Driscoll said. He suggested that's what occurred in the energy and utility stocks he's focused on. The Dow Jones Utility Average fell 1.3% while the Amex Oil Index dipped 0.1%. But by and large, the action was tilted toward the positive yet again.
It's All Good, Continued
Helping the S&P overcome steep declines in Albertson's and Roadway was strength in Best Buy ( BBY), which lifted earning estimates. Also, other retailers rallied after posting better-than-expected, or not-as-bad-as-feared, monthly same-store sales results, notably Sears ( S) and Ann Taylor ( ANN). The S&P Retail Index rose 1.2%.