Major indexes finished mixed Thursday, as a rally in oil prices tarnished the luster of friendly economic data and falling Treasury yields. Some activity was probably linked to the quarterly expiration of futures and options Friday, which might explain a jump in Nasdaq volume, says Standard & Poor's MarketScope.
The Dow Jones industrial average rose 43.47 points, or 0.39%, to 11,253.24. The broader Standard & Poor's 500 index added 2.31 points, or 0.18%, to 1,305.33. The tech-heavy Nasdaq composite index fell 12.28 points, or 0.53%, to 2,299.56, hampered by Apple (AAPL) and weakness in semiconductor stocks like Advanced Micro Devices (AMD), Intel (INTC) and Texas Instruments (TXN).
The Fed's rate-hiking days may be numbered, some analysts say. A bond rally is "reinforcing the prevalent bullish view that the Fed is closer to the end of its tightening phase," says Roger Volz, chief technical analyst at Swiss American Securities.
But the end might not be as near as some bulls hope. "We still expect the Fed to raise rates to 5.25% by midyear on strong growth, high levels of resource utilization, and inflation at the high end of its comfort zone," says John Ryding, chief U.S. economist with Bear Stearns.
A set of tame economic data eased inflation fears Thursday. The overall consumer price index rose 0.1% in February, while the core was up 0.1%, in line with expectations. Housing starts slowed by 7.9% to 2.1 million in February, still a healthy level, says Action Economics.
Meanwhile, jobless claims rose 5,000 to 309,000 in the week ended March 11. The Philadelphia Fed's index for March eased to 12.3 from 15.4 in February.
In economic data Friday, February industrial production is expected to rise 0.9%, says Action Economics. The University of Michigan's consumer sentiment index is seen holding steady at 86.7.
On the earnings front Thursday, Bear Stearns (BSC) posted a 36% jump in first-quarter profit, topping expectations in the wake of strong quarterly results this week from investment banking rivals Goldman Sachs (GS) and Lehman Brothers (LEH). Separately, regulators fined Bear Stearns $250 million for improper mutual fund trades.
Two major booksellers were also reporting earnings Thursday. Barnes & Noble (BKS) posted fourth-quarter net income of $1.76 a share, up from $1.56 a share and on the high end of its previous forecast. Borders (BGP) rose, as well, and was set to report after the close.
Outside earnings, ConAgra Foods (CAG) shares tumbled after the company said it would slash its quarterly dividend by 34%. The packaged food giant also announced a major restructuring that would include divesting its seafood and cheese businesses.
In broker calls, Ford (F) was downgraded by J.P. Morgan from overweight to underweight. The broker cited as one factor the introduction of a new pick-up truck by General Motors (GM).
Among other blue-chips, Altria (MO) lifted its 2006 earnings forecast to between $5.25 and $5.35 a share. The owner of Philip Morris cigarette companies and majority stakeholder in Kraft Foods (KFT) said it will record tax benefits of about $1 billion in the first quarter from a reversal of tax reserves.
Elsewhere, Google (GOOG) was lower after a report that the search giant plans to offer a comparison shopping service that would help traditional European retailers market and sell products on the Internet.
In the energy markets Thursday, April West Texas Intermediate crude oil futures closed up $1.41 cents to $63.58 a barrel amid the the largest air assault in Iraq since the 2003 U.S.-led invasion.
European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index rose 28.1 points, or 0.47%, to 5,993.2. Germany's DAX index inched lower 0.69 points, or 0.01%, to 5,897.79. In Paris, the CAC 40 index slipped 1.92 points, or 0.04%, to 5,126.01.
Asian markets finished mixed. Japan's Nikkei 225 index fell 222.83 points, or 1.37%, to 16,096.21. In Hong Kong, the Hang Seng index edged higher 8.68 points, or 0.06%, to 15,729.04. Korea's Kospi index rose 2 points, or 0.15%, to 1,335.98.
Treasury yields relaxed on the friendly economic data. Prices for 10-year Treasury notes closed higher at 98-28/32 with a yield of 4.65%, while 30-year bonds rose to 97-00/32 for a yield of 4.7%.