Stocks Find Higher Ground

Updated from 4:42 p.m. EST

The Nasdaq reclaimed the 2000 mark minutes before Tuesday's closing bell after hovering below the milestone for three weeks, as a late rally capped a somewhat bouncy and indecisive day on Wall Street.

The tech-heavy index gained 8.06 points, or 0.4%, to close at 2000.63, while the Dow added 52.07 points, or 0.5%, to 10,381.70; the S&P 500 was up 4.54 points, or 0.4%, at 1127.01.

The Nasdaq last closed above 2000 on March 8.

Volume on the New York Stock Exchange topped 1.3 billion shares, where advancers outnumbered decliners by about 2 to 1. Almost 1.6 billion shares changed hands on the Nasdaq, where advancers outpaced decliners by about 5 to 4.

"This was a nice follow-through on the rally we got over the last few days," said John Hughes, an equity strategist at Shields & Co. "We were looking for just a 'filler' day with light volume, and we got even a little more of a rally than we were looking for. I think that might be suggesting that there is a little more strength to this than we originally thought."

"You still have to be careful, because even though everything's been holding together technically, it has not been super-dynamic," Hughes added. "We haven't had a 2 billion-share day and up 2.5% in any of the major indices yet. Something like that would definitely be the confirmation that we're looking for."

The 10-year Treasury note was down 1/32 to yield 3.89%, after two days of sizable losses, and the dollar was stronger against the yen and weaker vs. the euro.

Earlier Tuesday, the Conference Board reported that its consumer confidence index was higher than expected in March at 88.3, up from the consensus estimate of 86. February's reading was revised up to 88.5 from 87.3.

"Those numbers are positive," said Robert Pavlik, portfolio manager at OakTree Asset Management. "The indecision out there is to be expected after the gains we've posted in the last couple of sessions and with the news that's coming later this week."

On Friday, the government reports nonfarm payrolls for March, and economists are forecasting that the economy added 123,000 jobs during the month. The unemployment rate is expected to remain at 5.6%.

"I'm a little concerned here, because it seems as though the jobs report number has been inflated," Pavlik said. "It seems sort of unrealistic to expect that kind of jobs growth at this time. We haven't seen huge declines in the initial claims area to support that kind of expectation, and I'm afraid that it might be setting up the market for failure."

Pavlik's position is reflected by subcomponents of the March consumer confidence survey, which showed the percentage of people finding that jobs are hard to get increased to 30% from 28.9% a month ago, while the number of those finding jobs plentiful inched up from 14.5% to 14.7%.

Patrick Fearon, an economist at A.G. Edwards, had more confidence in Wall Street's payroll expectations. "We're pretty comfortable with those numbers," said Fearon. "At some point, hiring is likely to pick up pretty strongly, but firms are just being so cautious out there right now that it's really hard to get a feel for when the hiring is going to accelerate."

Overseas stocks were mixed, with London's FTSE 100 closing 0.1% higher at 4413 and Germany's Xetra DAX down 0.2% to 3874. In Asia, Japan's Nikkei closed down 0.2% to 11,694, while Hong Kong's Hang Seng rallied 1.7% to 12,641.

A recovery in crude oil prices hurt airline stocks after six OPEC ministers, including Saudi Arabia's Ali al-Naimi, said the group should reduce production targets as planned to prevent prices from sliding during the second quarter. The Amex Airline Index fell 1.3%. Continental Airlines ( CAL) dropped 71 cents, or 5.5%, to $12.14 and AMR ( AMR) lost 20 cents, or 1.6%, to $12.24, as its American Airlines unit became the latest carrier to withdraw a recently announced fuel surcharge on tickets.

Crude oil for May delivery rose 80 cents, or 2.3 percent, to settle at $36.25 a barrel on the New York Mercantile Exchange.

Intel ( INTC) closed down 0.9% after the chipmaker said it will pay $225 million to Intergraph ( INGR) to settle a patent infringement lawsuit related to Intel's Itanium microchips. Its shares shed 26 cents to $27.43. American Express ( AXP) inked a deal with the Industrial and Commercial Bank of China that will allow it to issue branded credit cards in China. Its shares closed $1.05, or 2%, to $51.91.

PepsiCo ( PEP) raised its annual dividend 44% and authorized a three-year buyback of up to $7 billion. The food and beverage giant also said its first-quarter revenue will be up 10%, with earnings of 46 cents a share, above the consensus analyst estimate of 44 cents a share reported by Thomson One Analytics. Its shares closed down $1.07, or 2%, to $53.28.

Accenture ( ACN) reported a 3.7% increase in second-quarter profit, helped by gains in its consulting and outsourcing businesses. The management and technology consulting firm earned $123.1 million, or 22 cents a share, including a pretax restructuring charge of $107 million, or 7 cents a share. The consensus estimate, which excludes the charge, was for earnings of 25 cents a share on revenue of $3.18 billion. Last year, Accenture's second-quarter profit totaled $118.7 million, or 25 cents a share. Its shares finished up 40 cents, or 1.7%, to $24.45.

Goldman Sachs downgraded shares of Sears ( S), citing valuation concerns and the retailer's disadvantages against its competitors in some categories. Sears shares closed up 13 cents, or 0.3%, to $43.24.

U.S. stocks rose sharply Monday, with the Dow rising 116.66 points, or 1.14%, to 10,329.63 and the S&P 500 adding 14.41 points, or 1.3%, to 1122.47, putting it back into positive territory for the year. The Nasdaq Composite gained 32.55 points, or 1.66%, to 1992.57.

On Wednesday, a report on factory orders from February is due out from the Census Bureau at 10 a.m. EST. Orders are expected to have risen 1.4%, after declining by 0.5% in January. At the same time, the National Association of Purchasing Management will release the March results of its Chicago purchasing managers' index, expected to fall to 61 from 63.6 in February.

Earnings releases are scheduled before the opening bell from Best Buy ( BBY), expected to report fourth-quarter earnings of $1.39 a share, up from last year's $1.13 a share; Circuit City ( CC), which is expected to match last year's fourth-quarter earnings of 36 cents a share; and Monsanto ( MON), expected to report second-quarter earnings of 57 cents a share, up from 51 cents a share in the same quarter last year.

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