Stocks finished higher Wednesday after the U.S. dollar stabilized and some companies, including conglomerate General Electric (GE), issued upbeat profit outlooks.
The Dow Jones industrial average gained 66.3 points, or 0.69%, to 9,690.46. The tech-heavy Nasdaq rose 17.9 points, or 0.95% to 1,899.65. The broader Standard & Poor's 500 index added 8.29 points, or 0.8%, to 1,042.44.
Dow industrials component GE cheered investors with news that it sees only a modest profit increase next year, but expects to resume double-digit profit growth in 2005. GE also said it will spin off most of its life and mortgage insurance operations, and boosted its quarterly dividend by 5%.
Shares of Hewlett-Packard (HPQ) rose in after-market trading after the company reported fourth-quarter earnings per share (non-GAAP) of 36 cents, up 50% year-over-year and above the analyst consensus estimate of 35 cents. Revenue of $19.9 billion was up 10% year-over-year, and beat analyst consensus estimates of $19.0 billion, the company said.
In economic news, October U.S. housing starts rose a higher-than-expected 2.9% to a seasonally-adjusted annual rate of 1.960 million units.
"The strength of these data is impressive and underscores the strength of the recovery," economic research unit MMS says.
Economic reports coming Thursday include the November Philadelphia Fed manufacturing index, leading indicators, and weekly jobless claims.
Stocks rebounded Wednesday after four consecutive sessions of losses in consolidation of the lengthy rally, Standard & Poor's notes. Tuesday's sell-off came as the dollar plunged on news of growing international trade disputes. The dollar on Wednesday was firmer as the Bank of Japan intervened in currency markets by purchasing the greenback to forestall a surge in the yen, S&P says.
In other company news, cellular company AT&T Wireless (AWE) plans to lay off more than 10% of its 30,000 workers over the next year, The Wall Street Journal said on Wednesday, citing people familiar with the situation.
Analog Devices (ADI), which makes chips used in cell telephones, posted a higher quarterly profit on 22% higher revenues amid strong orders worldwide.
Network Appliance (NTAP), which makes data storage equipment, reported higher quarterly profit, as revenue grew 28% from customers spending more on storage products.
Motorola (MOT) said the cellular-phone company is expected to meet its earnings and revenue targets for the fourth quarter.
Qwest (Q), the phone company that is the subject of a federal accounting probe, reported a third-quarter profit after booking a $2.5 billion gain on the sale of certain operations.
UnitedHealth (UNH), the nation's largest health insurer, said it expects to hit its previous 2003 earnings estimate and slightly increased its 2004 forecast.
Guidant (GDT) shares rose after the medical devices maker said it sees better than expected $2.40 to $2.55 2004 EPS on revenue of $3.75 billion to $3.95 billion.
In merger news, Charles Schwab (SCH) says it will acquire SoundView Technology (SNDV) for $15.50 cash per share.
The Treasury market's five-day winning streak was snapped on Wednesday. Hedging trades related to a surge of corporate and agency debt issuance erased opening gains and provided a good excuse to take profits through the session, notes MMS International. However, a number of other factors contributed to the declines, including technically overbought conditions, a rebound in equities, and unwinding of some of the safety trade.
MMS says the surge in U.S. housing starts and permits in October from upwardly revised levels is "an ominous signal that this sector will be substantially stronger than expected as we enter 2004," thus providing another powerful engine of growth for the economy. The housing permits strength implies that the starts surge won't dissipate soon, and the erratic upside swings since late 2002 in activity in the West -- California, in particular -- more likely reflects the technology sector turnaround than quirks in the data, MMS says.
MMS now expects GDP growth of 5.5% in the first quarter of 2004 following its estimated 5% gain in the fourth quarter, with fourth-quarter growth in residential construction of 10% to 20% following an upwardly revised 20% to 30% growth pace in the third quarter.
European stock markets finished lower on Wednesday. London's Financial Times-Stock Exchange 100 index was down 27.3 points, or 0.63%, to 4,327.4 on profit taking and worries about the Tokyo Nikkei plunge overnight.
In Paris, the CAC 40 lost 9.54 points, or 0.28%, to 3,343.38. There was little reaction to a report that French consumer prices rose 0.2% in October. EADS, Thomson, and Rhodia stocks were all lower.
Germany's DAX index was down 13.99 points, or 0.38%, to 3,652.29, also in reaction to Tokyo's 2.85% slide overnight.
Asian stock markets finished lower. Japan's Nikkei 225 index lost 282.45 points, or 2.85%, to finish at 9,614.60 since the bearish mood returned on the U.S. dollar's sharp fall in the foreign exchange market and sluggish U.S. in Tuesday's session.
In Hong Kong, the Hang Seng index gave up 154.27 points, or 1.28%, to finish at 11,872.99.