Stocks finished higher Thursday, but well below the highs of the session as oil prices reversed direction in the afternoon and settled higher. Some of the activity may have been related to the expiration of futures and options on Friday, according to Standard & Poor's MarketScope.
The Dow Jones industrial average rose 13.13 points, or 0.13%, to 10,244.49. The broader Standard & Poor's 500 index was up 3.13 points, or 0.28%, to 1,123.5. The Nasdaq composite index added 7.56 points, or 0.4%, to 1,904.08.
After ranging between $42.75 and $43.95, the October Nymex crude oil contract finished up 30 cents at $43.88. Hurricane Ivan had supported crude prices throughout the week, and its passage north, out of the Gulf of Mexico, was responsible for price weakness in early trade on Thursday. While infrastructure damage to production facilities was minimal, the always jittery oil market bounced sharply from session lows, reports Action Economics.
The economic highlight for Friday is the preliminary September consumer sentiment index, which is expected to rise to 96.7 from August's level of 95.9. The pull-back in oil prices from the August highs should be supportive, although the increasingly louder drum of negative election rhetoric could weigh on sentiment over the near-term, says Action Economics.
Companies on Friday's earnings calendar include Carnival (CCL), Circuit City Stores (CC), and Biomet (BMET).
Among Thursday's economic news, the consumer price index (CPI) for August rose a tame 0.1% overall, and 0.1% on a core basis excluding food and energy prices. Year-over-year, the CPI decelerated to a 2.7% rate of growth, from up 3.0% in July; the core was steady at a 1.7% rate of growth. These data are a little better than expected.
In the index, energy prices fell 0.3% and gas prices were off 1.4% as there was no real pass-though of rising oil prices, says Action Economics. Weakness was led by apparel and transportation prices, which fell 0.2% and 0.3%, respectively, after 0.8% drops for both in July.
First-time jobless claims rebounded 16,000 to 333,000 for the week ended Sept. 11. The 4-week moving average held at 338,000. The recent hurricane distortions prevent the data from having much market value, though the tenor of the report is consistent with payroll growth in the 150,000 to 200,000, says Action Economics.
The Philadelphia Fed index, a regional gauge of manufacturing activity, fell to 13.4 from 28.5 in August. This was much weaker than the 25 reading that economists expected. "There is obviously no big surge in activity underway, but [the rise in] orders suggest little serious risk to activity in the short term," says Informa Global Markets.
In company news, Delta Air Lines (DAL) says it received a letter from its auditor Deloitte & Touche LLP that saying the company's recurring losses, labor, liquidity issues, and increased risk of Chapter 11 bankruptcy filing raise doubt about its ability to continue as going concern. Standard & Poor's Ratings Services lowered its corporate credit rating on the carrier to 'CC' from 'CCC'.
Investors also had more earnings warnings to digest. Nortel Networks (NT) said it expects third-quarter revenue to be lower than previously announced. It expects 2004 revenue percentage growth to be in the mid-single digits.
Elsewhere in the tech sector, Electronic Data Systems (EDS) reportedly says that US Airways' bankruptcy could reduce its third-quarter earnings per share by up to 3 cents due to a long-term information contract between the companies.
Swift Transportation (SWFT) says it sees lower-than-expected third-quarter earnings per share of 26 cents to 31 cents. Bear Stearns downgraded the stock to underperform from peer perform.
Best Buy (BBY) raised its quarterly dividend by 10%, to 11 cents per share.
Charles Schwab (SCH) reported client daily average revenue trades for August fell 6% from a year ago and were down 11% from July 2004.
Treasuries jumped in price, driving yields to 5-month lows, on Thursday, as tame inflation data eased worry about the pace of rate hikes by the Federal Reserve. Ultimately, the data will not forestall a Fed interest rate hike next Tuesday, says Action Economics. Short-covering, fresh leveraged (black box) fund demand, and mortgage convexity buying all helped drive the 10-year note yield below its recent 4.125% floor to a low of 4.06%, says Action Economics.
European stock markets finished mixed on Thursday. London's Financial Times-Stock Exchange 100 index was up 8.1 points, or 0.18%, to 4,556.5 amid a report Britain's retail sales rose more than expected 0.6% in August thanks to strong clothing sales.
Germany's DAX index gained 21.9 points, or 0.56%, to 3,963.65. Volkswagen was lower as Abu Dhabi rejected a plan to buy a stake in the company, which is beginning negotiations with the IG Metall union over a new contract.
In Paris, the CAC 40 index lost 0.17 point to 3,691.68. Hermes International was lower after the company said its second half growth would be more moderate than in the first half.
In Asia, the markets finished mixed on Thursday. Japan's Nikkei 225 index fell 19.22 points, or 0.17%, to 11,139.36. The market was led lower by companies tied to overseas sales including Toyota Motor and Kyocera, mirroring the weakness on Wall Street overnight.
In Hong Kong, the Hang Seng index rose 125.44 points, or 0.96%, to finish at 13,209.84.