Stocks finished higher Wednesday ahead of key economic data on manufacturing, employment, and economic growth. Speculation that the Federal Reserve will cut interest rates next week helped support the market.
The tech-heavy Nasdaq composite index was the leader of the day, finishing up 26.19 points, or 2.01%, to 1,326.73 thanks to strength in semiconductor stocks after Maxim Integrated Products (MXIM) posted a 19% rise in fiscal first-quarter profit and said it would pay a dividend for the first time since going public. The news bolstered confidence in a tech recovery.
The Dow Jones Industrial average rose 58.40 points, or 0.70%, to 8,427.41, helped by gains in IBM (IBM) and American Express (AXP). And the broader Standard & Poor's 500-stock index added 8.56 points, or 0.97%, to 890.71.
On Thursday, there will be plenty of economic reports to comb through. MMS International, an economic research provider, expects the advance reading on third-quarter gross domestic product will post 3.5% growth. The report should be dominated by a hefty 4.3% rise in consumer spending, and gains of 2% for equipment spending, exports, and government purchases. Also, there should be drops of 2% for residential construction and imports, and a big 20% fall in commercial construction, MMS says.
The October Chicago-PMI is expected to slip to 48.0 from 48.1, showing that manufacturing activity in the region has come well off the peak seen earlier in the year. The employment cost index for the third quarter and weekly jobless claims will also be reported Thursday.
On the earnings reporting roster are companies such as ExxonMobil (XOM), Aetna (AET), and Martha Stewart Living Omnimedia (MSO).
With the absence of any economic reports Wednesday, corporate news got most of the market's attention. Computer hardware and services maker IBM was higher after the company said the global economy may have hit bottom and that it's spending $10 billion to boost sales of certain computer services, according to wire-service reports.
The Wall Street Journal reported that Citigroup (C) plans to separate its retail-brokerage operations into a new unit that is expected to include equity research. Citigroup will hire Sallie Krawcheck, now chairman and chief executive officer of Sanford C. Bernstein & Co., a research and brokerage unit of Alliance Capital Management (AC), to head the new unit that is known as Salomon Smith Barney.
Meanwhile, Wal-Mart (WMT) shares were down after Goldman Sachs downgraded the stock of the world's largest retailer from its recommended list to a market perform rating on the premise that it might be more difficult for the company to grow in an improving economy.
On the earnings front, Corning (GLW) reported that third-quarter loss widened to 25 cents per share, from 24 cents a year ago, as sales fell 45%. The optical products maker reportedly plans to eliminate 2,200 more jobs.
And household-products maker Clorox (CLX) posted 84% higher first quarter earnings that exceeded analyst estimates on cost-cutting and higher sales.
Among sectors on the move, energy and tech stocks were higher.
But restaurant stocks fell after Darden Restaurants (DRI) issued a mixed sales outlook for October, prompting a number of analysts to cut ratings on the stock.
Treasuries were mostly lower in price in profit taking following Tuesday's surge on speculation the Federal Reserve will cut rates. The Treasury Dept. announced a $40 billion refunding package, with $22 billion in 5-year bills and $18 billion in 10-year notes, unchanged from August and in line with expectations, according to economic research firm MMS International.
European markets rose amid some favorable earnings news and outlooks from companies such as Unilever (UN) and Alcatel (ALA). In London, the Financial Times-Stock Exchange 100 index ended up 66.80 points, or 1.70%, to 4,002.70.
In France, the CAC 40 jumped 119.11 points, or 4%, to 3,084.22. And in Germany, the DAX Index rose 91.58 points, or 3.03%, to 3,113.59.
In Asia, the markets finished mixed. In Japan, the Nikkei gained 47.83 points, or 0.55%, to 8756.59. The gains were limited by jitters about the government's plans on non-performing loans cleanup and anti-deflation, due out later today. Market players said that buying by public pension funds offset poor sentiment stemming from bleak earnings outlook and weak U.S. consumer confidence, says S&P MarketScope.
In Hong Kong, the Hang Seng lost 74.21 points, or 0.77%, to 9,560.46.