Stocks closed with small gains Thursday as a late-day rally erased earlier losses. Traders anticipated Intel's (INTC) mid-quarter update after the close, and the November nonfarm payroll report on Friday. Meanwhile, the White House abandoned tarriffs on imported steel, while a report on weekly U.S. initial jobless claims was weaker than expected.
The Dow Jones industrial average reached a new recovery high, finishing up 57.4 points, or 0.58%, to 9,930.8. The broader Standard & Poor's 500 index gained 4.99 points, or 0.47%, to 1,069.72. The tech-heavy Nasdaq added 8.55 points, or 0.43%, to finish at 1,968.80. The Baby Bells, large-cap tech stocks and cyclical stocks led the rebound. Online education, computer and electronic retailing, airline, home improvement and other retailing stocks were weaker.
After the close of trading, Intel said it expects fourth-quarter revenue to be between $8.5 billion and $8.7 billion, as compared to the previous range of $8.1 billion to $8.7 billion. The chipmaker saw gross margin around 62%. Investors appeared to focus on Intel's disclosure that it will take a $600 million gooodwill impairment charge related to its wireless communications and computing unit, sending the shares lower in after-hours trading.
November nonfarm payrolls data dominates Friday's economic lineup. MMS expects an above-consensus November payrolls gain of 170,000, with the unemployment rate hovering at 6.0%. "The underlying tone of the report should be even stronger, given that retail trade payrolls will be damped by the 70,000 grocery workers on strike in California," says MMS.
Also Friday, traders will get a read of October factory orders, and consumer credit.
According to press reports, President Bush scrapped controversial steel tariffs on Thursday, 16 months ahead of schedule to avert trade retaliation from Europe and Asia.
In economic news Thursday, U.S. initial jobless claims rose 11,000 to 365,000 for the week ended Nov. 29. The four-week moving average rose 3,000 to 362,500. Continuing claims rose 44,000.
"Though the claims are weaker than expected, this looks more likely to be weekly noise than a significant break in the trend of improving job market statistics," says economic research firm MMS International. "Claims have now been below the 400,000 level for nine straight weeks and below 370,000 for five consecutive weeks, clearly good news for the labor market."
In company news, Qualcomm (QCOM) was sharply higher after raising its first-quarter earnings guidance to a range of 47 cents to 48 cents per share (excluding its QSI segment) on 11% to 12% revenue growth. That's up from the company's previous upward guidance of 40 cents per share (excluding the QSI segment) on a 1% to 6% revenue decline. S&P and J.P. Morgan upgraded the stock. Qualcomm gained 10%.
Allos Therapeutics (ALTH) surged 12% -- on heavy volume -- after submitting the last component of its new drug application to the Food and Drug Administration for approval to market RSR13 (efaproxiral) as an adjunct to whole brain radiation therapy for treatment to brain metastases from breast cancer.
Airline stocks were lower on news from Southwest Airlines (LUV). While the company says its December bookings are fine at this point, year-over-year comparisons for the month will be more difficult. The company believes that December load factors could fall below last year's level of 66%, and says that high energy costs are also weighing negatively on the company. The stock lost 6.9%.
Meanwhile, a Northrop Grumman (NOC) and Raytheon (RTN) team beat out Boeing (BA) and Lockheed Martin (LMT) for a Kinetic Energy Interceptor (KEI) development contract worth up to $4.5 billion over eight years. Both Northrop Grumman and Lockheed Martin added 2.7%. Boeing and Raytheon finished higher.
November sales updates rolled in from retailers. Abercrombie & Fitch (ANF) posted 13% lower November same store sales, and 1.2% higher total sales. Merrill Lynch downgraded the stock to 'neutral' from 'buy,' with the analyst saying it's likely the brand is stale, and needs updating. J.P. Morgan downgraded its rating on the stock to 'neutral' from 'overweight', while S&P cut its estimates. The stock lost 9.6%.
Best Buy (BBY) finished 5.7% lower. Investors were disappointed with the company's 8.6% increase in third quarter comparable store sales. The company also narrowed its third quarter earnings per share guidance to a range of 35 cents to 37 cents.
Wal-Mart (WMT) reported 3.9% higher total November same store sales in the U.S., and a 11% total sales rise. The company expects its December same store sales to rise between 3% and 5%. Costco (COST) posted a 14% bounce in November same store sales, and 17% higher net sales. The shares finished slightly higher unchanged.
Shares of AnnTaylor Stores (ANN) dipped 2.5% after the company posted 9.6% higher November same store sales, and 20% higher total sales. The company raised its fourth quarter earnings guidance to an upward range of 45 cents per share, up from 43 cents, and sees same store sales increasing between 6% and 8% in December, and 3% to 5% in January.
Sharper Image (SHRP) posted same store sales up 8% in November, and total sales up 22%. The stock lost 3.3%.
Federated Department Stores (FD) shed 2.5% after posting 0.1% lower November same store sales, and 0.8% lower total sales. The company says that its November same store sales were consistent with its guidance, and the company continues to expect this range for December and the fourth quarter.
Treasuries staged a mid-day recovery and ended Thursday's session higher in price. Bonds were first supported by a higher-than-expected tally on initial jobless claims, but focus soon shifted to Friday's big data, preparing for a solid payrolls number.
President Bush has scrapped U.S. tariffs on foreign steel imports found illegal under World Trade Organization rules. Bush has kept an import licensing and monitoring system in place to track steel imports and highlight unexpected surges, reports MMS.
"Such a decision should be friendly [to the U.S. dollar] on the margin as risk of a trade war is averted," says MMS.
But the dollar moved lower, as some suggested a case of buy the rumor, sell the fact with regards to the steel tariff announcement, MMS adds. Ultimately, "the steel news helped remove some risk of protectionism from the market and reduce fear of retaliatory foreign sales in the U.S. credit markets."
European bourses ended lower on Thursday in the wake of the European Central Bank's decision to leave its benchmark interest rate unchanged at 2.0%.
London's Financial Times-Stock Exchange 100 index finished down 13.8 points, or 0.31%, to 4,378.20. Like its Brussels-based counterpart, the Bank of England left its key interest rate unchanged Thursday at 3.75%. Most observers see the BoE hiking rates early in 2004, reports S&P's Marketscope.
In Paris, the CAC 40 lost 5.38 points, or 0.15%, to 3,496.55. Germany's DAX index was down 0.88 point, or 0.02%, to 3,874.78. October German manufacturing orders beat expectations, up 2.0% month over month, following September's 1.9% gain.
Asian stock markets ended mixed. Japan's Nikkei 225 index gained 103.6 points, or 1.00%, to 10,429.99. The Ministry of Finance's quarterly survey, which was released before the morning open, showed that confidence was regained in the October-December quarter among companies, amid robust exports and profits, reports MMS International. Tokyo Electron gained 1.2%, Advantest added 1.69%, Canon edged up 2.57%, and Toshiba Corp. increased 2.69%.
In Hong Kong, the Hang Seng index shed 18.53 points, or 0.15%, to finish at 12,342.65.