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Stocks Narrowly Higher

Results from retailers Circuit City and Pier 1 were soft, but initial jobless claims fell 5,000 last week. Oil prices fell

Stocks finsihed narrowly higher Thursday amid a mixed bag of economic data and weak results from retailers Circuit City (CC) and Pier 1 (PIR).

U.S. initial jobless claims fell 5,000 last week to 381,000, after jumping 27,000 the week before. The U.S. leading indicators inched up 0.1% in May to 102.1, from 102.0 in April. The U.S. Philly Fed index, meanwhile, fell to -17.1 in June, the seventh straight month of a negative reading on the Philadelphia region.

Major indexes were volatile Thursday, but ended the day a bit higher. The Dow Jones Industrial Average rose 34.03 points, or 0.28%, to 12,063.09. The broader S&P 500 gained 5.02 points, or 0.38%, to 1,342.83. The tech-heavy Nasdaq composite index added 32.36 points, or 1.33%, to 2,462.07.

For every stock moving higher on the New York Stock Exchange, another fell in price. On the Nasdaq, the ratio was 17 to 12 positive.

Oil prices dropped Thursday. On the NYMEX, crude oil for July delivery was down $4.88 to $131.80 per barrel.

At least some of Wall Street's attention was on legal developments Thursday. Former Bear Stearns hedge fund manager Ralph Cioffi and Matthew Tannin were indicted on federal securities fraud, about a year after the funds they managed collapsed. In a separate case, prosecutors charged more than 400 people in a national probe of mortgage fraud involving an estimated $1 billion.

U.S. Treasury Secretary Henry Paulson said Thursday that the Federal Reserve should take a greater role in regulating the financial system. The Fed should have the power "to intervene in order to protect the system, so they can carry out the role our nation has come to expect -- stabilizing the overall system when it is threatened."

Among Thursday's stocks in the news, Circuit City Stores (CC) posted a $1 per share loss from its first quarter, vs. a 33 cent loss a year ago, as same-store sales dropped 11% and total sales fell 7.4%. The loss was narrower than expected, and the retailer expects a gradual recovery in the second half of its current fiscal year. The company suspended future dividend payments.

Monsanto (MON) agreed to acquire Marmot, the operator of a privately held seed company in Guatemala. The terms of the deal were not disclosed.

Aetna (AET) reaffirmed its earnings guidance for the second quarter, saying its medical cost trend is in line with expectations.

Hexion Specialty Chemicals filed a lawsuit in Delaware court to stop its $10.6 billion merger deal with Huntsman Corp. (HUN). Hexion says the capital structure agreed to buy Huntsman is no longer viable, because of Huntsman's increased net debt and lower-than-expected earnings.

Pier 1 Imports (PIR) posted a loss of 37 cents per share, vs. a 64 cents loss a year ago, even as same-store sales fell 5.4% and total sales plunged 13%. The retailer expects "slightly negative to modestly postive" same-store sales next quarter.

Washington Mutual (WM) said it has cut 1,200 jobs, or about 3% of its employee count.

Coventry Health Care (CVH) says it expects second quarter earnings of 55 to 57 cents per share, and full-year earnings of $3.65 to $3.75. Wachovia analysts downgraded the stock from outperform to perform.

J.M. Smucker (SJM) posted earnings of 67 cents per share, vs. 75 cents a year ago, as restructuring, merger and other costs offset a 20% rise in sales.

Major European indexes were lower Thursday. In London, the FTSE 100 index fell 0.84% to 5,708.40. In Paris, the CAC 40 index lost 0.59% to 4,591.39. Germany’s DAX index fell 0.12% to 6,721.17.

In Asia, Japan’s Nikkei 225 index lost 2.23% to 14,130.17. In Hong Kong, the Hang Seng index fell 2.26% to 22,797.61.

Treasury market

Treasury prices fell Thursday. The two-year Treasury dropped 06/32 to 99-13/32 for a yield of 2.95%; 10-year notes lost 20/32 to 97-09/32 for a yield of 4.22%; and 30-year bond lost 26/32 to 93-26/32 for a yield of 4.77%.

Steverman is a reporter for BusinessWeek's Investing channel.

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