Stocks ended higher on Wednesday as investors toasted Hewlett-Packard's (HPQ) profit growth and a multi-billion dollar merger in the retail sector. But a late-afternoon spike in oil prices tempered gains.
The Dow Jones industrial average rose 60.67 points, or 0.58%, to 10,548.32. The broader Standard & Poor's 500 index added 6.49 points, or 0.55%, to 1,181.92. The Nasdaq composite index gained 21.06 points, or 1.01%, to 2,099.68.
Looking ahead, more big companies are due to report earnings on Thursday. Among the well known names on the schedule are entertainment giant Disney (DIS), retailers Gap (GPS) and Limited Brands (LTD) and tech outfit Novell (NOVL).
Thursday will be a light day on the economics front. Among the reports that will draw interest: first-time jobless claims for the week ending Nov. 13. Informa Global Markets sees them rising to 336,000 from 333,000.
Stoking Wednesday's rally was news that Hewlett-Packard posted an expectation-topping 27% jump in quarterly profit on revenue growth of nearly 8%. Results benefited from expense controls and growth in printers, computers, and technology services.
Economics news was mostly positive for stocks. The retail inflation gauge known as the Consumer Price Index rose 0.6% in October vs. the 0.5% that had been expected by Informa Global Markets as rising energy costs were reflected in consumer prices. But excluding volatile food and energy prices, the CPI rose 0.2% as Informa had forecast.
And U.S. industrial output in October rose a greater than expected 0.7%, following a 0.1% rise in September. That is a bit better than the 0.3% rise that was expected. Meantime, capacity utilization rose to a 77.7% rate from a prior 77.3%. "The breadth of gains and the size of the overall rise is a stark improvement over the results from the prior two months, when industrial production was essentially flat," says Informa Global Markets.
In merger news, discount retailer Kmart (KMRT) agreed to merge with old-line merchant Sears (S) in an $11 billion deal that would create the third largest U.S. retailer.
Also in stocks news, Network Appliance (NTAP) posted higher quarterly profit thanks to strength in all its data storage products.
Fast-food chain Jack In The Box (JBX) posted higher quarterly net profit that topped expectations thanks to sales of sourdough sandwiches and other new products.
Tempering stock gains was a spike in oil prices. Oil prices edged up 84 cents to $46.90 a barrel after the Energy Department warned that heating oil supplies have fallen, ahead of the winter season.
In other economics news, new home construction in October rose by a greater-than-forecast 6.4% to a annualized rate of 2.027 units from a revised 1.905 million rate in September.
U.S. Treasuries finished higher in price after an earlier selloff. Retail participation was lured by the huge corporate calendar. The only slightly higher reading in the core consumer inflation measure suggests the Fed may stay with its measured pace of raising interest rates.
European stock markets closed higher on Wednesday. London's Financial Times-Stock Exchange 100 index was up 25.50 points, or 0.53%, to 4,795.90 as December Brent crude oil futures were down. But the market was restrained by a rise in sterling and reports that U.K. unemployment rose in October for the second consecutive month and that wage growth slowed to 3.7%.
Germany's DAX index was up 66.19 points, or 1.61%, to 4,183.41 although economic advisers see German economic growth slowing next year due to stagnating consumption. Volkswagen and BMW were lower as both have large markets in U.S. Techem gained after the company forecast higher earnings for the year.
France's CAC-40 index gained 49.87 points, or 1.31%, to 3894.14 as government maintained its 2004 economic growth forecast of 2.5%. Cap Gemini and Alcatel were higher in response to a report that Hewlett-Packard had higher earnings. Carrefour was higher after selling its stake in Portuguese retailer Modelo Continente for $448 million.
In Asia, the markets finished mixed on Wednesday. Japan's Nikkei 225 index fell 30.46 points, or 0.27%, to 11,131.29 mirroring losses on Wall Street overnight. Exporters dropped on worries over a stronger yen, with Honda Motor sliding 2.44% while Toyota Motor shed 1.44%. Oil explorer INPEX, which debuted on the Tokyo Stock Exchange Wednesday, rose well above its IPO price. Electronics maker Pioneer fell 0.72% after a local newspaper reported it would invest about 27 billion yen to build a new production line for plasma TVs.
In Hong Kong, the Hang Seng index added 78.90 points, or 0.57%, to close at 13,824.98 with properties, industrials and utilities posting gains. S&P Asian Equity Research downgraded Lenovo Group to 2 STARS (sell) from 4 STARS (buy).