Stocks ended mixed Thursday as investors hestitated ahead of a key employment report due out Friday morning. Banks, financials, cyclicals, and traditional defensive stocks such as household products were strong, but techs suffered more selling.
The Dow Jones industrial average gained 32.20 points, or 0.32%, to 10,091.87, as gains in Procter & Gamble (PG) and 3M (MMM) offset losses in Microsoft (MSFT) and United Technologies (UTX).
The Nasdaq Composite, meanwhile, fell 32.68 points, or 1.95%, to 1,644.85, led by a 9.5% drop in Oracle (ORCL) after a Merrill Lynch analyst said he remains cautious about the application software business. The broader Standard & Poor's 500 index was off 1.90 points, or 0.17%, to 1,084.56.
The market struggled most of the day Thursday on disappointing corporate news and on concerns that the U.S. economy is not recovering fast enough to restore corporate profits. That's why Wall Street will scrutinize Friday's key economic reports, particularly the April employment report, for more clues on the status of the economic rebound.
April non-farm payrolls are expected to increase by 60,000 after a 58,000 jump in the previous month, according to Standard & Poor's economic research unit MMS. However, the nation's unemployement rate is expected to tick up to 5.8% from 5.7% in March.
Wall Street will also study a gauge of activity in the services sector in April. The Institute of Supply Management non-manufacturing index is expected to show a slight increase in activity, registering a reading of 57.5. Last month the gauge hit 57.3, with any number above 50 signaling an expansion.
Also, Federal Reserve Chairman Alan Greenspan will weigh in on the debate on options accounting and the impact on earnings Friday morning when he speaks to an Atlanta Fed conference on financial markets. This issue is a focus for equity investors, and particularly in tech, where option grants were used extensively to reward management. If options were expensed to income, it would have resulted in even lower 2001 operating profits. S&P MMS doubts Greenspan will say anything significant on interest rate policy or the economy.
The earnings docket, meanwhile, will be fairly light on Friday. Among the highlights will be energy holding company Edison International (EIX).
On Thursday, economic data suggested that the U.S. economic recovery is on track, but there was debate about whether it was bouncing back as quickly as economists had hoped. A slower rebound suggests corporate profit growth will not be as robust as hoped.
U.S. factory orders in March increased 0.4%, exceeding economists' forecast of a 0.1% rise. That compares with a decline of 0.1% in February. Inventories fell 0.6% after a revised 0.5% decline in the previous month.
But not all economic reports topped expectations. Initial jobless claims fell 10,000 to the 418,000 level for the week ended Apr. 27. Standard & Poor's economic research unit MMS had been expecting the decline in the number of workers filing for first time unemployment benefits to be greater: a 13,000 drop.
The Nasdaq was hampered Thursday by stocks such as cable and pay TV services provider EchoStar (DISH), which posted a greater-than-expected $0.12 a share loss in the first quarter.
Name-your-price ticket seller Priceline.com (PCLN) said its revenues fell on the decline in airline travel, but it still managed to post a quarterly net profit.
Weighing on the broader market was news that Xerox's (XRX) bond ratings, already at "junk" status, were cut further by Moody's Investors Service late Wednesday based on the copier maker's heavy debt load.
However, the Dow was boosted by financial, defensive, and cyclical names. In addition, computer and printer maker Hewlett-Packard (HWP), gained after Bernstein raised its investment rating to outperform.
Dow component Philip Morris (MO), the name behind Marlboro cigarettes and Kraft Foods, said it won a dismissal of antitrust lawsuits brought by rivals who claimed the company kept other brands from being displayed prominently in stores.
Meanwhile, Kmart (KM), the bankrupt retailer, warned it may have to restate past results after a probe of its accounting practices, raising concern among investors of more losses.
Health insurer Cigna Corp. (CI) posted 21% lower first quarter net profit due to higher investment losses.
On the plus side, H&R Block (HRB), the tax preparer, said it expects to post earnings for the year ended Apr. 30 at the high end of its previous forecast of as much as $2.30 a share.
Treasuries ended lower in price, sending yields higher. Profit taking after the recent runup and better than expected factory orders data weighed on the 10-year note as weakness in equities was mostly overlooked and Middle East tensions were lowered somewhat, says Standard & Poor's MMS. Some position-squaring ahead of tomorrow's payroll report also added to gyrations. By the close, the entire curve finished in the red.
European markets finished mixed. London's FTSE 100 was up 48.60 points, or 0.95%, to 5,174.10 as April CIPS Construction activity rose to 56.6 from 56.3 in March. The market was also encouraged by the U.S. stock market rally late Wednesday.
France's CAC 40 Index lost 41.18 points, or 0.92%, to 4,421.56 as French consumer confidence sank to a 4-year low due to rising unemployment and higher prices.
Germany's DAX Index gave up 76.64 points, or 1.52%, to 4,964.56 as IG Metall plans strikes to seek higher wages. There is a fear that a lengthy walkout will hurt the econonmic recovery. There was little reaction to a report that German PMI rose to 49.1 in April from 48.4 in March.
Asian stocks finished mixed. Japan's Nikkei 225 Index was off 1.78 points, or 0.02%, to 11,551.01. Japanese markets will be closed Friday for Constitiution Memorial Day. They will also be closed Monday for Children's Day.
Hong Kong's Hang Seng Index jumped 282.53 points, or 2.46%, to 11,780.11.