Stocks rose slightly Wednesday before the Thanksgiving holiday amid additional signs of economic strength.
The Dow Jones industrial average gained 15.6 points, or 0.16%, to 9,779.57. The broader Standard & Poor's 500 index was up 4.56 points, or 0.43%, to 1,058.45. The tech-heavy Nasdaq rose 10.27 points, or 0.53%, to 1,953.31.
U.S. stock markets will be closed Thursday for the Thanksgiving holiday. Friday sees a shortened session with trading ending early at 1:00 p.m. ET.
In economic news Wednesday, U.S. durable goods orders surged 3.3% in October after a big upward revision to a 2.1% gain in September (up 0.8% previously). In the report, nondefense capital goods orders jumped 2.8% after a revised 5.1% gain in September. Shipments rose 0.6% after a revised 2.9% gain. Inventories rose 0.2%, after having fallen 31 out of last 32 months.
"These data are much stronger than expected and support our forecast of more quarters of strong growth ahead," says economic research outfit MMS International.
Initial jobless claims fell 11,000 to the 351,000 level in the week ended Nov. 22 from an upwardly revised 362,000 level (previously 355,000.) This is the lowest claims level since early 2001. The four week moving average fell to 10,000 to 359,000. Continuing claims dropped 105,000 to the 3,368,000 level in the week ended Nov. 15.
The Chicago PMI manufacturing index jumped to 64.1 in November from 55.0 in October, and gains were largely broadbased. That's the highest reading since October 1994. New orders exploded higher to 73.3 from 59.2. Production jumped to 69.0 from 62.0. However, employment weakened to 48.5 from 53.1. Meanwhile, prices paid climbed to 67.3 from 61.5. These data surprised on the high side and will put additional pressure on Treasuries, says MMS International.
The University of Michigan consumer sentiment index rose to 93.7 for the final November reading, near the forecast, following a 93.5 preliminary reading and a 89.6 print for October. Expectations improved to 88.1 from a preliminary reading of 87.6 and October's 83.0. Meanwhile, current conditions slipped to 102.5 from the preliminary level of 102.8 and October's reading of 99.9.
New home sales fell 3.5% to 1.1 million units, a bit weaker than forecast. And personal income rose 0.4% in October compared with a 0.3% gain in September, while spending was flat, vs. a drop of 0.3%, very close to market expectations.
Also released was the Fed's Beige Book, a compendium of reports from the district Federal Reserve Banks, which was more upbeat than the last time around. The reports showed that "the economy continued to expand in October and early November," and that "improvements appeared to be reasonably broad based."
"This is about as enthusiastic as the Fed gets," says David Wyss, chief economist for Standard & Poor's. "I think the Fed needs a few more months before it tightens, but we will probably see the language on the balance of risk shifting to neutral at the December or January meeting."
Among sectors on the move, gold stocks rose after the price of the metal jumped to nearly $7 to about $399 per ounce.
In pharmaceuticals, Wyeth (WYE) shares were higher on reports the company, whose diet pills were used in fen-phen combination, is not responsible for heart damage incurred by plantiff who took its pills, according to Standard & Poor's MarketScope.
Eli Lilly (LLY) was down on news that its Zyprexa drug performed no better in reducing schizophrenia symptoms than did a much less-expensive drug, a study found.
Genentech (DNA) fell on news that its experimental metastatic colon cancer drug Avastin, when used with a two-drug chemotherapy regimen, may not work that much better than those other chemo regimens alone in a Phase II study. The biotech outfit expects FDA approval of Avastin by the first quarter.
Praecis Pharmaceuticals (PRCS) shares rose after the company received FDA approval for its prostate cancer treatment Plenaxis.
H&R Block (HRB) shares rose after the tax services company posted second-quarter EPS of 6 cents, vs. 21 cents loss, on a 23% revenue rise. It sees $3.65 to $3.85 in fiscal year 2004 EPS, up from its previous guidance of $3.56 to $3.72. S&P upgraded the stock to 'hold' from 'avoid'.
Tech Data (TECD) moved higher after the company reported third-quarter earnings per share (GAAP) of 46 cents, vs. 57 cents a year ago and above analysts' estimate, despite a 15% net sales rise. The company sees 50 cents to 55 cents in fourth-quarter EPS (excluding charges). S&P reiterated a 'hold' ranking on the stock.
In the latest on the mutual fund scandal, Bank One (ONE) said it expects regulators to take action against its mutual fund adviser in connection with the widening probe into improper fund trading.
Federated Investors (FII) said so-called late trades were accepted from a hedge-fund adviser by Federated employees on 15 occasions, according to news reports.
Treasuries ended Wednesday's holiday-shortened session lower, amid a tide of strong economic data and a weak dollar. "Though the numbers really shouldn't have shocked after the 8.2% surge in third-quarter GDP reported yesterday, they do call into question forecasts from some economists that solid growth cannot be sustained in the current and upcoming quarters," says economic research outfit MMS International.
The bond market will be closed Thursday for the Thanksgiving holiday. On Friday, trading will wrap up early at 2 p.m. ET.
European stock markets finished lower. London's Financial Times-Stock Exchange 100 index fell 18.4 points, or 0.42%, to 4,370.3 as Britain's third-quarter GDP rose revised 0.7%, the fastest rate in year, vs. 0.6% originally reported.
In Paris, the CAC 40 was down 2.96 points, or 0.09%, to 3,415.19. Germany's DAX index lost 20.18 points, or 0.54%, to 3,712.98 as the European Union allows Germany and France to exceed deficit limits. The OECD says they'll exceed limits in 2005 as well.
Asian markets finished higher Wednesday. In Japan, the Nikkei 225 index gained 184.63 points, or 1.85%, to close at 10,144.83. In Hong Kong, the Hang Seng index rose 78.60 points, or 0.65%, to 12,086.67.