Stocks rose on Thursday, weathering a weaker-than-expected report on retail sales and a fresh record high in crude oil prices.
The Dow Jones industrial average jumped 91.48 points, or 0.86%, to 10,685.89. The broader Standard & Poor's 500 index was up 8.68 points, or 0.71%, to 1,237.81. The tech-heavy Nasdaq composite rose 16.74 points, or 0.78%, to 2,174.55.
September NYMEX crude oil rose 90 cents to a new record of $65.80 a barrel, after touching $66 during trading. Distilled products provided support once again, with front-month gasoline charging up to fresh record highs of 1.9525 a gallon, up more than 5 cents on the day, says Action Economics.
U.S. Treasury Secretary John Snow said tapping the Strategic Petroleum Reserve was "off the table," though this comment had little if any impact on prices, says Action Economics. For the most part, sources see refining bottlenecks, and not crude supplies, behind current record oil prices, says Action Economics.
Friday's economic calendar is rather busy. The preliminary reading for University of Michigan's August consumer sentiment is expected at 96.0 from July's reading of 96.5. The jump in oil and gas prices to new all-time highs will likely hold back sentiment on the month, says Action Economics. Other more timely measures of sentiment have been mixed.
The June trade deficit is expected to rise to $57.1 billion from May's lower-than-expected reading of $55.3 billion. Exports are expected to rise 1.0% to $108.0 billion, while imports are expected to rebound 1.7% to $167.0 billion. Supporting upside risk for imports is the surge in oil prices, says Action Economics.
July import prices are expected to increase another 0.6%, while export prices are expected to be flat). Import prices will again be pressured higher by oil prices, predicts Action Economics. Firmness in the dollar over the last several months, combined with the further ease in other commodity prices, suggests that trade prices outside of petroleum will be tame, says Action Economics.
In economic news Thursday, U.S. retail sales surged 1.8% in July, missing the 2.2% consensus forecast, after a 1.7% jump in June. Excluding autos, sales were up 0.3% following a revised 0.9% gain in June. Though the data are a little below expectations for more robust gains, they still reflect healthy growth over the last couple of months, says Action Economics. On a year-over-year basis, sales are up 8.3%, while ex-auto sales are up 6.7%.
Retail strength was paced by vehicle sales, up 6.7%, though most components also showed healthy gains, with gas store sales up 2.4% and electronics, up 1.0%. Clothing sales fell 0.5%, while department store sales were down 1.0%.
In a separate report, June business inventories were flat in June while business sales rose 0.7%, a positive scenario for the economy.
Jobless claims fell 6,000 to 308,000 in the week ended Aug. 6 following a revised 314,000 the week before. The data should help offset some of the "disappointment" from the retail sales data, and keep pressure on yields, and may give some support to the dollar, says Action Economics.
Among stocks on the move, TiVo (TIVO) shares fell after DirectTV (DTV) reportedly says it will stop marketing digital video recorders from Tivo this year, as part of its plan to replace them with New Corp.-created technology.
News Corp. (NWS) extended its poison pill for two years, saying the goal of the poison pill is to stop potential future acquisitions of significant amounts of its voting stock by Liberty Media (L). The media company reported fourth-quarter earnings per share of 22 cents, vs. 15 cents a year ago, on a 12% revenue rise.
Chip stocks came under pressure after Goldman Sachs downgraded Intel (INTC) and Freescale Semiconductor (FSL) to in-line from outperform. And J.P. Morgan downgraded chip equipment maker Novellus Systems (NVLS) to neutral from overweight.
In merger news, online advertising outfit Fastclick (FSTC) agreed to be acquired by Valueclick (VCLK) in a stock-for-stock deal valued at about $214 million, or $10.11 per share.
As expected, Yahoo (YHOO) announced a major strategic partnership in Chinese e-commerce company Alibaba.com, whereby Yahoo is contributing its China businesses and $1 billion for a 40% stake in the combined Alibaba.com.
Qualcomm (QCOM) agreed to acquire closely-held Flarion Technologies, a maker of orthogonal frequency division multiplex access (OFDMA) wireless technology, for $600 million in cash and stock.
Treasury prices rose, sending yields down, following a strong 10-year note auction. The benchmark 10-year yield sank to 4.33%.
European stock markets finished lower on Thursday.
London's Financial Times-Stock Exchange 100 index was off 18.9 points, or 0.35%, to 5,358.6 on profit taking and higher crude oil prices. Among stocks on the move, Aviva was lower after the CEO forecast a tough second half. Arla Foods was lower after the company said full-year profit will miss analysts' estimates by as much as 10%. BAE Systems rose after winning a ?100 million Northrop Grumman contract. Corin Group fell as the company expects full-year profit to be "slightly" below analysts' estimates as sales were curbed in the first half.
Germany's DAX index fell 36.74 points, or 0.73%, to 4,953.93 as oil prices rose. Traders were ignoring reports that Eurozone second-quarter GDP rose 0.3%, and Germany's domestic economy expanded in the second quarter for the first time in almost a year, reports Standard & Poor's MarketScope. Schering was higher on rumors Novartis might make a bid for it. Deutsche Telekom fell as the company's second-quarter net income rose less than expected 63%.
In Paris, the CAC 40 index lost 18.01 points, or 0.4%, to 4,509.1. Air France-KLM fell even though the carrier reported first-quarter sales rose 5.5%. Suez, the subject of takeover speculation, was a bit lower on profit taking.
Asian markets rallied for a second day on Thursday.
Japan's Nikkei 225 index jumped 165.24 points, or 1.37%, to 12,262.32 on optimism toward economic growth after the Bank of Japan raised its growth assessment Tuesday after the close of trading. Investors ignored the poor showing on Wall Street yesterday and a rise in benchmark crude oil above $65 in Asian trading, says Standard & Poor's MarketScope.
In Hong Kong, the Hang Seng index climbed 98.79 points, or 0.64%, to 15,445.2. Gains in China Mobile, HSBC Holdings, and Hutchison Whampoa supported the Hang Seng's rise. These three stocks account for about half of the market capitalization for the index, says Standard & Poor's MarketScope.