Stocks were trading modestly higher late Thursday afternoon, extending a two-day rally amid solid earnings reports and a drop in oil prices. However, mixed economic data did little to clarify whether the Federal Reserve will raise interest rates later in the year, says Standard & Poor's Equity Research.
In afternoon trading, the Dow Jones industrial average rose 23.85 points, or 0.21%, to 11,350.97. The broader Standard & Poor's 500 added 2.43 points, or 0.19%, to 1,297.86. The tech-heavy Nasdaq composite was up 6.7 points, or 0.31%, to 2,156.24.
Recent inflation readings have supported the Fed's case for leaving interest rates unchanged, some analysts say. "The key to continuing this trend will be further signs that growth is slowing as we expect it to," notes Goldman Sachs economist Dominic Wilson. "On that front, alongside the inflation news, the last few days have provided strong confirmation of the damage on the housing side, with news still clearly worse than expected there."
The markets continue to face a number of uncertainties, others observe. "Investors seem pressured by slowing growth concerns on one hand and inflation on the other, making the investment call very unpredictable," says Tobias Levkovich, chief U.S. equity strategist at Citigroup.
Economic reports remained in the spotlight Thursday. The Philadelphia Fed index of regional business activity jumped to 18.5 in August, about twice the expected level, after falling to 6.0 in July. Jobless claims fell 10,000 to 312,000 in the week ended Aug. 12, slightly lower than expected. Leading indicators fell 0.2% in July, a little weaker than forecast.
On the company side, Dow member Hewlett-Packard (HPQ) was higher after the computer maker reported fiscal third-quarter profits that beat analysts' estimates. Rival Dell (DELL), which last month lowered its outlook for quarterly earnings and revenue, posts results after the close.
Retailer Sears Holdings (SHLD) was lower despite posting better-than-expected second-quarter earnings as margins improved at its Sears and Kmart stores.
Shares of Merck (MRK) fell after a New Orleans jury said the drugmaker was negligent in a federal case involving its Vioxx painkiller and must pay $50 million.
In analyst calls, General Motors (GM) was lower after J.P. Morgan Chase lowered its recommendation on the automaker from overweight to neutral. J.P. Morgan also upgraded hotel and gaming operator Las Vegas Sands (LVS) to overweight, sending shares higher.
Chipmaker Advanced Micro Devices (AMD) was higher after Citigroup raised its rating on the stock from hold to buy.
In the energy markets, September West Texas Intermediate crude oil futures fell $1.83 to $70.06 a barrel, a two-month closing low, amid worries a slowing economy could reduce demand.
European markets finished slightly higher. In London, the Financial Times-Stock Exchange 100 index edged up 3.8 points, or 0.06%, to 5,900.4. Germany's DAX index gained 20.57 points, or 0.35%, to 5,833.51. In Paris, the CAC 40 index was up 7.53 points, or 0.15%, to 5,144.84.
Asian markets finished mixed. Japan's Nikkei 225 index slipped 50.52 points, or 0.31%, to 16,020.84. In Hong Kong, the Hang Seng index lost 77.98 points, or 0.45%, to 17,373.05. Korea's Kospi index advanced 12.17 points, or 0.93%, to 1,327.78.
Treasuries drifted after the strong Philly Fed index reading. The 10-year note was little changed at 100-02/32 for a yield of 4.86%, while the 30-year bond edged down in price to 92-13/32 for a yield of 5%.