Major stock indexes finished higher in moderate trading Thursday. Investors took comfort as Federal Reserve Chairman Alan Greenspan's reiterated the Federal Open Market Committee's outlook for a "measured pace" of rate hikes. The energy sector gave a strong performance after oil prices surged on speculation that tropical storm Arlene would turn into a hurricane and cause supply problems. After the close, Intel (INTC ) raised its second-quarter revenue forecast in a mid-quarter update.
The Dow Jones industrial average was up 26.16 points, or 0.25%, to 10,503.02. The broader Standard & Poor's 500 index gained 6.27 points, or 0.52%, to 1,200.94. The tech-heavy Nasdaq composite index gained 16.73 points, or 0.81%, to 2,076.91.
Earlier in the day, Federal Reserve Chairman Alan Greenspan stated that the economy is sound and that inflation remains contained, he also suggested that the Fed would continue to raise rates. Yields on long-term Treasury issues pulled back from earlier highs, while the dollar gained strength.
Also on Thursday morning, U.S. initial jobless claims fell by 21,000 in the first week of June to 330,000, in line with median estimates. This falls back in line with March and April averages, following a small spike in May.
July crude oil futures settled sharply higher Thursday, up $1.76 to $54.30 a barrel, as the season's first tropical storm formed in the Caribbean. Last year, there was significant damage to Gulf of Mexico platforms due to hurricanes, which cut production back.
After the close, Intel said that better-than-expected demand for notebook computer chips would result in higher revenues for the second quarter. The chipmaker said it now expects sales between $9.1 billion and $9.3 billion, up from its previous estimate of between $8.6 billion and $9.2 billion.
In corporate news, Computer Associates (CA ) agrees to acquire IT management software and services company Niku (NIKU ) in a deal valued at roughly $350 million in cash, or $21 for each share of Niku.
Tax-preparation giant H&R Block (HRB ) reported fourth quarter of earnings of $3.66, vs $3.24 last year, on a 7.3% rise in revenue. The company also raised its quarterly dividend to 14%.
Texas Instruments (TXN ) reported that the Delaware Surpreme Court affirmed a ruling that rejected Qualcomm's (QCOM ) claim that Texas Instruments violated a cross-licensing agreement between the two companies.
Citigroup reportedly initiated coverage of Internet search engine Google (GOOG ) with a buy rating.
The SEC accepted a settlement offer from videogame maker Take-Two Interactive (TTWO ) in an issue related to its accounting practices. Standard & Poor's reiterated its hold rating on the stock.
Treasury yields pushed higher following remarks by Greenspan that suggested the FOMC would continue its incremental increases to the Fed funds rate, but pulled back from session highs after Greenspan said he didn't see much inflationary pressure. The yield on the 10-year Treasury note finished at 3.95%.
The dollar gained strength following the Greenspan testimony, and traded at $1.222 per euro.
European stock markets finished mixed Thursday. London's FTSE 100 index dropped 0.90 points, or 0.02%, to 5,002.80. U.K. industrial production for April rose 0.9%, after a 1.2% skid in March, beating expectations. The Bank of England left key rates unchanged at the day's meeting. Halfords Group was higher after its fiscal year net earnings nearly tripled. William Morrison Supermarkets were down on lower earnings.
Germany's DAX index rose 5.46 points, or 0.12%, to 4,562.75, after a 9 point slip Wednesday. Shares of Volkswagen traded higher after the company denied it would sell a convertible bond.
In Paris, the CAC 40 index lost 17.64 points, or 0.42%, moving to 4,153.71. Arcelor was lower after an industry executive said he believes steel demand is slowing. Carrefour traded lower after the government threaten to lower prices at its stores.
Asian markets closed lower Thursday. In Japan, the Nikkei 225 index fell 120.15 points, or 1.07%, to 11,160.88, as traders took money out of the markets ahead of Greenspan's testimony and Intel's mid-quarter update. Exporters like Toyota Motor and Matsushita Electric were top laggards.
In Hong Kong, the Hang Seng index dropped 0.24 points to 13,898.31. The market stayed in a holding pattern ahead of Greenspan's comments, although banking stocks HSBC Holdings and Hang Seng Bank showed gains.