Stocks finished higher Thursday, rebounding from early losses as hopes for a Mideast peace resolution overcame disappointing corporate earnings. A closely watched employment report out Friday could add to confusion over whether the Federal Reserve will hike rates at its Aug. 8 meeting, says Standard & Poor's Equity Research.
The Dow Jones industrial average rose 42.66 points, or 0.38%, to 11,242.59, paced by Caterpillar (CAT). The broader Standard & Poor's 500 index added 1.72 points, or 0.13%, to 1,280.27. The tech-heavy Nasdaq composite climbed 13.53 points, or 0.65%, to 2,092.34.
NYSE breadth was positive, with 20 issues advancing for every 13 declining, while Nasdaq breadth was 17-12 positive.
The market's volatility may continue for the rest of the summer, some analysts say. "Various factors may be coming together, supporting a late-year rally, but summer choppiness most likely will persist," says Tobias Levkovich, chief U.S. equity strategist at Citigroup.
Optimism grew for a Mideast ceasefire Thursday. U.K. Prime Minister Tony Blair said he was hopeful a United Nations resolution could be reached "within the next few days." A U.S. State Department official indicated a goal of Friday to halt the fighting between Israel and Hezbollah.
Friday's payrolls report and the Fed's Aug. 8 meeting also loomed. Jobless claims rose 14,000 to 315,000 in the week ended July 29, slightly more than expected. The Institute for Supply Management's non-manufacturing index of business activity unexpectedly fell to 54.8 in July from 57.0 in June. Factory goods orders increased 1.2% in June.
In earnings news, Ford (F) was lower after the automaker said its second-quarter loss was more than double what it previously announced, due to unexpectedly high pension costs.
Meanwhile, Tyco (TYC) was also lower after the conglomerate reported a 17% drop in quarterly earnings on higher copper prices and stock option expenses.
Coffee retailer Starbucks (SBUX) was down after the company said July sales rose 4%, below expectations for 7% sales growth.
Shares of Medtronic (MDT) tumbled after the medical device maker posted fiscal first-quarter results that fell below Street forecasts.
Wireless carrier Sprint Nextel (S) was sharply lower following a 38% drop in second-quarter profit.
Companies reporting quarterly results Friday include Goodyear Tire & Rubber (GT), Occidental Petroleum (OXY), and Peoples Energy (PGL).
Also in focus Thursday, retailers turned in firm July sales figures. Stores beating analyst expectations included Wal-Mart (WMT), Costco (COST), Limited Brands (LTD), and Nordstrom (JWN), while Gap (GPS) and Target (TGT) were among companies lagging.
In the energy markets, September West Texas Intermediate crude oil futures closed down 35 cents at $75.46 a barrel as hurricane worries subsided.
European markets finished lower. In London, the Financial Times-Stock Exchange 100 index dipped 93.7 points, or 1.58%, to 5,838.4. Germany's DAX index lost 40.79 points, or 0.72%, to 5,640.03. In Paris, the CAC 40 index was down 42.57 points, or 0.85%, to 4,983.68.
Asian markets finished narrowly mixed. Japan's Nikkei 225 index nudged up 6.08 points, or 0.04%, to 15,470.37. In Hong Kong, the Hang Seng index advanced 15.67 points, or 0.09%, to 17,048.42. Korea's Kospi index slipped 3.06 points, or 0.24%, to 1,292.05.
Treasury yields ticked lower in the wake of the mixed economic data, after rising initially following interest-rate hikes by the Bank of England and the European Central Bank. The 10-year note edged up in price to 101-10/32 for a yield of 4.95%, while the 30-year bond rose to 91-25/32 for a yield of 5.04%.