Stocks ended higher Thursday, after drifting lower most of the day. A strong durable goods orders report bolstered expectations for continued strength in the economy.
Plus, a late-day decision by the U.S. Food and Drug Administration to approve Biogen's (BGEN) Amevive for treating psoriasis caused additional end-of-day strength in biotechs, even though Biogen shares never opened for trading because of the impending FDA decision.
The Dow Jones industrial average gained 58.20 points, or 0.57%, to 10,216.08, led by strength in SBC Communications (SBC) and General Electric (GE).
The tech-heavy Nasdaq composite gained 24.18 points, or 1.44%, to 1,685.85. And the broader Standard & Poor's 500 index was up 11.06 points, or 1.02%, to 1,097.08.
On Friday, the latest update on economic growth will be the highlight. S&P MMS expects the preliminary first quarter gross domestic product growth to be 6.1%. An upward revision is likely from the previous GDP estimate of 5.8% due to upward revisions in the inventory, trade, and consumption components.
Data on the housing market is also due out Friday. S&P MMS expects new home sales to decline 2.1% in April to a 860,000 unit pace. Softer housing sector data largely represents a give-back for the elevated levels of activity seen during the unusually warm and dry winter.
In economic news Thursday, the government reported April orders for durable goods -- items expected to last at least three years -- jumped 1.1%, much higher than expected. The March durable orders reading was revised higher to a 0.2% gain from a decline of 0.6% originally. Shipments surged 3.5% in April after a revised 0.5% gain in March (flat previously). Orders excluding transportation were up 2.9% and up 3.4% excluding defense.
Also, initial jobless claims fell 9,000 to 415,000 for the week ending May 18, compared to an upwardly revised 425,000 for the prior week. The 4-week moving average fell to 420,000 from 422,700. Continued claims rose again to 3.87 million from 3.84 million, as the extended benefits discourage a more active job search.
In company news, ImClone Systems (IMCL) announced that its CEO and president, Samuel Waksal, will resign. His brother, Harlan Waksal, was named to those positions. The news comes on the heels of disappointing clinical results of its cancer treatment Erbitux. The shares were down Thursday.
The sore spots of tech and telecom had weighed on overall sentiment most of the day amid poor earnings news from Ciena (CIEN) and the debt downgrade of Qwest Communications (Q). Standard & Poor's cut the long term corporate credit rating for Qwest Communications to junk status, saying the risk profile has increased due to poor visibility.
On the earnings front, Ciena shares skidded after the telecom equipment supplier posted a second quarter loss per share of $1.86 on an 80% revenue decline, and says it expects third quarter revenue will be flat to down from second quarter levels. Graphics chipmaker NVIDIA (NVDA) reported first quarter EPS of $0.47, vs. $0.16 a year ago, on a sharp revenue rise.
Meanwhile, Medtronic (MDT) reported better than expected fourth quarter EPS of $0.34 on a 20% revenue rise. JP Morgan upgraded the stock of the medical products maker to buy. And doughnut chain Krispy Kreme (KKD) reported EPS of $0.15, a penny above the consensus estimate.
The IPO of online entertainment company Netflix (NFLX) attracted buyers. The stock closed at $16.75, above its $15 offering price. The company's site charges a monthly subscription rate of $19.95 to rent three DVDs a month.
But the IPO of software maker Altiris (ATRS) wasn't as popular. The shares closed at $8.87, below the offering price of $10.
U.S. Treasuries ended slightly lower Thursday. Prices went full circle Thursday, as the strong durable goods report took the long bond a point higher into the afternoon. But as the buying dried up and stocks reversed back into the plus column, Treasuries couldn't sustain their bullish momentum and collapsed into the close, says S&P MMS.
The dollar also got a lift from the strong durables report, along with the Bank of Japan intervention efforts to dampen the strength in the yen.
European markets were mixed. London's FTSE 100 ended with a gain of 23.40 points, or 0.45%, to 5,175.30, as UK manufacturing remained flat in April, while retail sales rose 1.7%, more than expected.
France's CAC 40 index gained 15.30 points, or 0.35%, to 4,341.59 as French consumer spending rose an unexpected 0.8% in April. Germany's DAX index fell 40 points, or 0.8%, to 4,879.50, following report German first quarter GDP rose 0.2%, as expected.
Asian stocks ended mixed. Japan's benchmark Nikkei 225 index gained 17.87 points, or 0.15%, to close at 11,979.85, led by bank and brokerage shares on further signs of economic recovery after the Bank of Japan upgraded its overall assessment of the domestic economy for the third consecutive month in its May report (released yesterday).
Hong Kong's Hang Seng lost 170.45 points, or 1.45%, to close at 11,624.75 amid weakness in the telecom sector.