Stocks finished modestly higher Thursday, as investors traded cautiously ahead of Friday's closely-watched June employment report. Tame economic data drove down Treasury yields and countered speculation that the jobs number Friday could stoke inflation worries, says Standard & Poor's Equity Research.
The Dow Jones industrial average rose 73.48 points, or 0.66%, to 11,225.3. The broader Standard & Poor's 500 index edged up 1.75 points, or 0.08%, to 1,274.07. The tech-heavy Nasdaq composite improved 3.16 points, or 0.25%, to 2,155.09.
Volume was low. NYSE breadth was positive, with 21 issues advancing for every 13 declining, while NASDAQ breadth was 16-14 positive.
A fresh batch of economic data helped ease interest-rate fears. "The market was fueled by some weaker economic data and the fact that we didn't have any real follow-through in energy prices on the upside due to a less bullish oil inventory build-up," says Peter Cardillo, chief market analyst at SW Bach. "The market is now basically struggling to keep its head above water as we enter the major report of the month."
Friday's employment report is the main event this week. Nonfarm payrolls are expected to rebound 230,000 in June after two months of lackluster growth, says Action Economics. Wednesday's solid ADP job-market report caused some analysts to raise their estimates.
Investors were digesting mild weekly unemployment data Thursday. Jobless claims dropped 2,000 to 313,000 in the week ended July 1, from an upwardly revised 315,000. In related news, ADP National Employment rejected rumors that it planned to restate yesterday's surprisingly strong job-market reading.
Separately, the Institute for Supply Management's index of non-manufacturing business activity slipped to 57.0 in June from 60.1 in May, weaker than expected. The pending homes sales index climbed 1.3% to 113.4 in April, according to the National Association of Realtors, ending a streak of three consecutive monthly declines.
In corporate news, a court decision sent shares in Altria ("MO") up nearly 6%. The Florida Supreme Court overturned a $145 billion punitive damage award against tobacco companies, deeming it "excessive."
Tepid retail sales reports were also in focus. Wal-Mart ("WMT"), Costco ("COST"), Pier One ("PIR"), Gap ("GPS") and Limited Brands ("LTD") were among retailers reporting June same-stores sales that fell below Street forecasts. On the positive side, Bebe ("BEBE"), JC Penney ("JCP") and AnnTaylor ("ANN") turned in higher-than-expected results.
Elsewhere, Intel ("INTC") was higher after the chipmaker unveiled plans to invest $600 million in wireless broadband provider Clearwire (see BusinessWeek.com, 7/6/06, Intel's $600 Million WiMax Bet).
Aerospace company Boeing ("BA") was higher after the Canadian government said it will likely order at least 16 CH-47 Chinook helicopters and four C-17 Globemaster transport airplanes.
Satellite radio outfit XM Satellite Radio ("XMSR") reported slower subscriber growth in the second quarter, while competitor Sirius Satellite Radio ("SIRI") posted subscriber increases that exceeded analyst expectations.
Semiconductor maker Microchip Technology ("MCHP") was higher after Citigroup raised its price target for the shares by 7% to $46.
In the energy markets Thursday, August West Texas Intermediate crude oil futures closed down 5 cents at $75.14 a barrel despite a weekly inventory report showing an unexpectedly large decline in crude supplies. A surprising increase in gasoline stocks weighed on crude prices, says Action Economics.
European markets finished higher. In London, the Financial Times-Stock Exchange 100 index rose 63.3 points, or 1.09%, to 5,890. Germany's DAX index bounced 69.84 points, or 1.24%, to 5,695.47. In Paris, the CAC 40 index was up 45.15 points, or 0.92%, to 4,966.45.
Asian markets finished mixed. Japan's Nikkei 225 index fell 202.54 points, or 1.3%, to 15,321.4. In Hong Kong, the Hang Seng index rebounded 173.81 points, or 1.07%, to 16,440.99. Korea's Kospi index declined 15.89 points, or 1.24%, to 1,263.96.
Treasury yields dropped after the mild economic data. The 10-year note rose in price to 99-18/32 for a yield of 5.18%, while the 30-year bond climbed to 89-03/32 for a yield of 5.23%. Short-covering ahead of Friday's jobs report contributed to rising Treasury prices, says Action Economics.