Stocks traded higher in a narrow range Thursday in slow trading. The banking, oil, cyclical, and telecom sectors attracted some attention from investors. Bonds, which got hammered Wednesday following a strong retail sales report, were down but off the worst levels of the session. The latest economic data came in close to forecasts and provided more signs of an economic recovery.
The Dow Jones industrial average gained 17.1 points, or 0.18%, to 9,288.92. The broader Standard & Poor's 500 index added 4.27 points, or 0.43%, to 988.3. Meanwhile, the tech-heavy Nasdaq composite index edged up 9.73 points, or 0.58%, to 1,696.34.
In economic news, the producer price index, a measure of inflation at the wholesale level, rose 0.1% in July, with the core up 0.2%. On a year-over-year basis, the overall PPI is up 3%. In July, energy prices were up 0.3%, boosted by a 3.6% rise in gas. Car prices were up 0.4%. The price data are a little firmer than the market expected, and should discourage concerns of falling prices, says economic research outfit MMS International. Nevertheless, the data continues to reflect a benign inflation environment, MMS says.
Initial jobless claims rose 2,000 to 398,000 in the week ended Aug. 9, marking the fourth straight week below 400,000. Despite the modest increase in claims, the four-week moving average slipped 4,000 to the 394,000 level. Continuing claims slipped 6,000 to 3,657,000 in the week ended Aug. 2. While the July claims figures were subject to seasonal distortions, the sub-400,000 claims figures seen so far in August suggest that conditions in the labor market, while still tepid, are on the mend, says MMS.
The U.S. trade deficit shrank to $39.55 billion in June from a downwardly revised $41.48 billion in May. June exports gained 2.4% to $84.62 billion, while imports were unchanged at $124.17 billion.
On the earnings front, Brocade Communications (BRCD) reported third-quarter earnings per share of 1 cent, vs. 8 cents a year ago, on a 12% revenue drop.
Some retail stocks were lower after a few outfits reported results. Target (TGT) posted second-quarter EPS of 39 cents, vs. 38 cents a year ago, on 1.5% same-store sales rise and 9.1% total revenue rise.
Urban Outfitters (URBN) announced second-quarter EPS of 47 cents, vs. 32 cents a year ago, on 11% same-store sales rise and 22% net sales rise. The company's EPS was much higher than analysts' forecast. The apparel retailer also declared a 2-for-1 stock split.
Texas Instruments (TXN) advanced after SoundView upgraded its rating on the stock to outperform from neutral. The firm reportedly is more bullish on TI and other names in the semiconductor sector based on broadbased recovery themes seen at SoundView's semiconductor conference yesterday.
Watch for quarterly reports later Thursday from PC maker Dell (DELL) and chip maker Analog Devices (ADI).
Treasury prices fell Thursday, but were well off the session lows. In light of the upbeat data released Thursday, market players are worried the Fed will have to tighten rates if the economic recovery continues, according to Standard & Poor's MarketScope. The yield on the 10-year note hovered near 4.60%.
Traders were bracing themselves for tomorrow's reports on CPI, industrial production and capacity utilization, and the University of Michigan consumer sentiment.
European stock markets were higher. In London, the Financial Times-Stock Exchange 100 gained 57.1 points, or 1.37%, to 4,237.8 with AstraZeneca leading way on a "buy" recommendation from UBS Financial Services. There was little fundamental news to move the market.
In Germany, the DAX Index advanced 53.4 points, or 1.58%, to 3,452.7 even though the government reported Germany has slumped into recession with second-quarter GDP easing 0.1%. With Italy also in a recession, the Eurozone economy failed to rise in the second quarter. In France, the CAC 40 rose 53.64 points, or 1.67%, to 3,261.7.
In Asia, major stock indexes finished higher. Japan's Nikkei index finished up 160.72 points, or 1.65%, to 9,913.47. Meanwhile, Hong Kong's Hang Seng index rose 72.55 points, or 0.7%, to 10,374.02.
U.S. Marines landed aboard nine helicopters in Liberia's capital to help West African peacekeepers take over security in the battle-worn city: Reuters
The U.S. and Britain, citing credible intelligence reports, warned their nationals of terror threats to aviation and other interests in Saudi Arabia. British Airways suspended all flights to the kingdom: Reuters