Stocks Rebound Late; BP Soars

NEW YORK ( TheStreet) -- Stocks rebounded in the last moments of trading and pared most of their losses on the day, helped by a relief rally in BP ( BP) shares and more regulatory and legal certainty in the financial sector.

Stocks had struggled for much of Thursday after disappointing regional manufacturing data trumped better-than-expected earnings from JPMorgan Chase ( JPM) and a decrease in initial weekly jobless claims.

But the Dow Jones Industrial Average finished well off its steepest lows of the day, losing 7 points, or 0.1%, to 10,359. The S&P 500 finished 1 point higher, or 0.1%, at 1096, and the Nasdaq closed nearly 1 point lower, or 0.03%, to 2249.

Late in the day, BP shares surged, finishing more than 7% higher on news that the oil flow in the Gulf of Mexico had been stopped. That, in turn, helped oil-related stocks rally late and the NYSE Arca Oil index finished 1% higher on the day.

Shares of Goldman Sachs ( GS) also jumped late on speculation that the company had reached some sort of settlement with the Securities and Exchange Commission concerning its various legal travails. After the bell, the SEC said Goldman Sachs agreed to pay $550 million to settle allegations involving subprime CDO marketing materials, which the agency highlighted as the largest penalty ever paid by a Wall Street firm. Shares closed 4.4% higher.

Also late in the day, the U.S. Senate passed financial regulatory reform legislation. The bill now goes to President Obama's desk for his signature, which could happen next week.

"We had quite a trifecta of resolution there. I don't remember a series of such uncertainty coming together at a resolution at the end of the day like this," said Jim Paulsen, chief investment strategist at Wells Capital Management, who saw the Goldman settlement as the most important piece of news.

"The combination of Goldman settling and the BP news certainly lifted things," said Bill Stone, chief investment strategist at PNC Wealth Management. About the oil leak curtailment, he said, "watching that pipe spitting oil one day after another, people are left with a feeling of helplessness. Maybe it's just the psychological lift that people needed."

Google ( GOOG) also released second-quarter earnings after the bell, but missed analysts' estimates and reported earnings of $6.45 a share.

Earlier, stocks were mired in the red after various downbeat economic reports gave investors pause about the economic recovery. "None of the reports are a surprise," said Kevin Pianko, a partner at WeiserMazars LLP. "There have been indications that while expansion continues, it's slowing down."

"If you look at what's coming out in earnings releases -- take Alcoa ( AA), for instance -- volume and revenue have increased but pricing is down. Until you see stability in pricing, you're still seeing a slackening in the economy," he said. "The continued improvement is consistent with what we've been seeing in the last several months with the inventory buildup, but from what we're seeing, the consumer still isn't spending. Intel ( INTC) may have had its best quarter, but that was all from business spending."

JPMorgan Chase reported second-quarter net income of $4.8 billion, or $1.09 a share, which included a benefit from a $1.5 billion loan-loss reserves reduction. Wall Street estimates, which exclude special items, were for a profit of 70 cents a share. The stock was losing 0.5%, at $40.16

Overseas on Thursday, Hong Kong's Hang Seng lost 1.5%, and Japan's Nikkei fell 1.1%. The FTSE in London was shed 0.9%, and the DAX in Frankfurt lost 1%.

The Economy

The Labor Department said initial weekly jobless claims shed 29,000 to 429,000 in the week ended July 10. The decline was much better than expected, with economists looking for claims of 450,000 after last week's upwardly revised level of 458,000.
Unemployment

In a separate report, the Labor Department said prices at the wholesale level fell 0.5% in June, suggesting that inflation pressures remain even more muted than expected. Economists had forecast that the producer price index would slip 0.1% in June, after dropping 0.3% in May. Excluding volatile food and energy prices, the core rate inched 0.1% higher, as was expected. The core rate rose 0.2% in May.

Manufacturing activity in the New York region slowed significantly in July as the Empire Manufacturing Index came in at 5.08, disappointing forecasts for a reading of 18. July's level also represents a steep drop from June's reading of 19.57.

June industrial production grew 0.1%, which surpassed expectations for production to remain steady in June after jumping 1.3% higher in May. Capacity utilization, meanwhile, came in at 74.1%, which was slightly below the 74.2% utilization that economists had been forecasting.

The Philadelphia Federal Reserve Bank said manufacturing activity slowed in the region in July. The Philly Fed Index came in at 5.1 for the month, which was much lower than the forecast level of 10.1, and June's reading of 8.

The Energy Information Administration said natural gas supply levels gained 78 billion cubic feet in the week ended July 9, which was at the low-end of the range that analysts were projecting of between 78 billion and 82 billion cubic feet.

Company News

On the Dow, Merck ( MRK), Cisco ( CSCO) and Intel ( INTC) had the strongest gains.

ON Semiconductor ( ONNN) agreed to buy SANYO Semiconductor, a subsidiary of Sanyo Electric, and other semiconductor assets in a cash and stock deal worth $366 million.

Nutritional supplements company NBTY ( NTY) agreed to be acquired by private-equity firm Carlyle for $3.8 billion in cash, or $55 a share.

Apple ( APPL) will discuss iPhone 4 antenna problems at a news conference on Friday.

In earnings news, Novartis ( NVS) increased its year-end sales guidance after reporting second-quarter earnings of $2.4 billion and sales that rose 11%, to $11.7 billion.

Fairchild Semiconductor ( FCS) swung to a profit in the second quarter and said gross margins improved on a better product mix. Shares gained 4.6%.

PPG Industries ( PPG), a global supplier of protective and decorative coatings, said earnings surged 83%, allowing the company to surpass estimates by 20 cents with a quarterly profit of $1.63 a share. The stock finished 0.1% higher.

Late Wednesday, Marriott ( MAR) beat expectations with a profit of 31 cents a share -- analysts had been looking for earnings of 28 cents a share -- and sales of $2.8 billion.

Commodities and the Dollar

Following the EIA's report, the August natural gas contract surged 28 cents higher to settle at $4.59 per million British thermal units. Meanwhile, crude oil for August delivery finished 42 cents lower, at $76.62 a barrel.

Elsewhere in commodity markets, the August gold contract settled ahead by $1.30 at $1,208.30 an ounce.

The dollar was trading lower against a basket of currencies, and earlier, the dollar index fell to its lowest level in more than two months. It was last down by 1.2%.

Treasuries

The benchmark 10-year Treasury was up 18/32, dropping the yield to 2.987%.

The two-year note was largely unchanged, with the yield holding at 0.609%. The 30-year bond increased 1 3/32, diluting the yield to 3.976%.

--Written by Melinda Peer and Sung Moss in New York.

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