Stocks trucked higher on Thursday on fresh merger talk in the telecom sector and on positive economic data. Investors shrugged off an increase in oil prices.
The Dow Jones industrial average gained 85.80 points, or 0.80%, to 10,741.61. The broader Standard & Poor's 500 index added 5.01 points, or 0.42%, to 1,197. The Nasdaq composite index was up 0.55 points, or 0.03%, to 2,053.10.
After Thursday's close, PC maker Dell (DELL) reported higher quarterly profit excluding a tax related charge. But investors apparently could be discouraged by a revenue number that was merely in line with expectations. Dell's shares fell in after-hours trading Thursday after finishing higher in the regular session.
Looking ahead to Friday, there is little on the docket in terms of economic and earnings news. Groupe Danone (DA), the French food group, is about the only big company scheduled to report earnings.
On Thursday, The Wall Street Journal reported that phone company Verizon (VZ) has talked informally of buying MCI (MCIP) for cash and stock. Standard & Poor's notes that the informal bid by Verizon reported in the story is close to the $6.3 billion tentative offer reportedly made for MCI by Qwest (Q).
In earnings news, health insurer Aetna (AET) reported fourth quarter profits that topped expectations. The company also raised its forecast and declared a 2-for-1 stock split.
Office supply company Office Depot (ODP) reported a higher quarterly profit thanks to sales growth in North America.
Keeping a lid on the Nasdaq was news that Swedish telecommunications equipment maker Ericsson (ERICY) posted profit that topped expectations -- but reported gross margins that were short of analyst forecasts.
Cognizant Technology Solutions (CTSH), a tech services provider which has the bulk of its staff in India, posted sharply higher quarterly profit.
Sara Lee (SLE) announced a major restructuring, saying it would spin off its $4.5 billion apparel business and unload its packaged meats unit in Europe, among other moves.
In economics news, the U.S. trade gap for December showed a $56.4 billion deficit, about $1 billion narrower than the median estimate, following a revised $59.3 billion gap in November (first reported as $60.3 billion), according to Informa Global Markets. The ex-petroleum deficit narrowed to $40.3 billion from $41.4 billion, a far smaller improvement than the overall figure.
Meantime, initial jobless claims unexpectedly fell by 13,000 to a new cycle low of 303,000 in the week ended Feb. 5 after a 9,000 drop to 316,000K the week before.
On the oil front, crude prices rose to near the $47 mark on the NYMEX, a noticeable reversal from the high-$44s seen yesterday. The reversal comes alongside sharp gains in heating oil and natural gas, with supplies in the latter down from last week, says Informa Global Markets.
Treasuries, already under pressure due to the larger than expected narrowing of the December trade gap, extended their losses Thursday after disappointing results from the government's $14 billion auction of 10-year notes. The yield on the 10-year Treasury rose to 4.06%
European stock markets closed mixed on Thursday. In London, the Financial Times-Stock Exchange 100 index gained 9.60 points, or 0.19%, to 5,000 as March Brent crude oil futures were up 53 cents to $43.66 level. Shire was sharply lower after Canada told the company to take its Adderal XR hyperactivity medication off the Canadian market after the company reported the deaths of 14 children and six adults taking the drug. ICI was up to a 2-1/2 year high after reporting higher fourth quarter earnings. Rolls-Royce was higher after the company reported higher second-half earnings and left its dividend unchanged.
Germany's DAX index was off 11.14 points, or 0.26%, to 4,342.01 though German exports unexpectedly fell 4% in December, the first drop in four months and biggest since last June. DaimlerChrysler was lower after the company reported fourth-quarter profit that fell short of analysts' expectations.
In Paris, the CAC 40 index gained 0.75 points, or 0.02%, moving to 3,970.37. Avenir Finance was higher after company said 2004 sales rose 45%. Devoteam was higher after the company said fourth quarter sales rose 29% and forecast 20% growth for 2005. Groupe Crit was higher after company report fourth quarter sales rose 7.4%.
Asian markets finished higher on Thursday. Japan's Nikkei average was up 80.21 points, or 0.70%, to close at 11,553.56. M&A speculation was fueled by a report in the Nihon Keizai Shimbun alleging that Sumitomo Mitsui Financial Group and Daiwa Securities Group might start talks. Both companies denied that merger talks were in progress. Trading was suspended in both of the companies to allow time for the markets to assess the possibilities and when trading was resumed, both companies' shares moved higher, Daiwa up 5.3% and Sumitomo Mitsui Financial Group up 2.7%. This was the highlight of an otherwise mixed session.
Hong Kong's market was closed in observance of Chinese New Year.