Thursday's heavy load of economic data and earnings news was both good and bad, but investors chose to focus on the positive, causing stocks to close solidly higher.
Economic data showed some strength in jobless claims, but weakness in a 8.5% plunge in March new home sales. With the market in the heart of earnings season, poor results from Amazon.com (AMZN), Starbucks (SBUX) and Whirlpool (WHR) raised worries about U.S. consumer spending, but Ford (F) offered investors a surprise profit.
Also Thursday, the U.S. dollar rallied sharply against the euro, thanks partly to a Wall Street Journal article saying that the Federal Reserve may stop cutting interest rates after a small cut at next week's meeting. Oil prices fell for the first time in several days.
"The [stock] market is ready to move higher," says Chris Johnson of Johnson Research Group. "A lot of the bad news out there is priced into stocks."
On Thursday, the Dow Jones industrial average closed up 85.73 points, or 0.67%, to 12,848.95. The broader S&P 500 added 8.89 points, or 0.64%, to 1,388.82. The tech-heavy Nasdaq composite index rose 23.71 points, or 0.99%, to 2,428.92.
On the New York Stock Exchange, 20 stocks moved higher for every 11 in negative territory. The ratio on the Nasdaq was 18 to 10 positive. "Trading was more active than has been seen recently," S&P's MarketScope said.
Stocks were in negative territory in the morning, but rallied strongly in the afternoon before paring those gains in half by the close. Stocks have been stuck in a narrow trading range, Johnson says. He expects stocks to "tread water" until some especially good earnings news comes along to launch equities higher.
On Thursday, dozens of major companies reported results from the first three months of 2008. "Earnings results seem to be mixed so far overall," says Jay Collins of DT Trading, "but, we are definitely seeing guidance pointing to a rocky road ahead as the future quarters keep getting pared back on their projections."
New home sales slowed to a weak pace of 526,000 in March, from 575,000 in February. Eleven months of new homes are sitting on the market, the largest inventory since Sept. 1981, while the median sales price fell from $244,200 to $227,600.
U.S. durable goods slipped 0.3% in March, after a 0.9% decline in February. Also, U.S. jobless claims fell 33,000 to 342,000 last week, from 375,000 the week before. "These data ... suggest the economy is not as bad as many fear," says Action Economics. However, John Ryding, economist at Bear Stearns, said the durable goods report "does not change the picture of a weak manufacturing sector."
On Thursday, oil finally took a break from its rapid ascent in price. On the NYMEX, June crude oil was down $2.34 to $115.96 per barrel. The euro against the U.S. dollar fell 1.24% to $1.5692, while the price of gold dropped $19.60 to $889.40 per ounce.
Among stocks in the news Thursday, Wendy's International (WEN) agreed to be acquired by the Triarc Companies (TRY), which owns Arby's, in a $2.34 billion all-stock deal. Wendy's also posted earnings of 10 cents per share, down from 16 cents a year ago.
Ford Motor (F) unexpectedly posted a narrow profit Thursday, reporting earnings of 5 cents per share, vs. a 15-cent loss a year ago. Revenue rose 1.2%.
Apple (AAPL) shares rose 3.71% after the maker of iPods and Mac computers posted earnings of $1.16 per share, vs. 87 cents a year ago, as revenue rose 43%. International sales made up 44% of the quarter's revenue, and gross profit margins narrowed.
Amazon.com (AMZN) posted earnings of 34 cents per share, vs.
26 cents a year ago, as sales rose 37%. However, the company reportedly warned investors that profit margins will narrow in 2008.
Starbucks (SBUX) shares were tumbling after the company said it expects earnings of 15 cents per share in the second quarter and 12% revenue growth. The company's U.S. same-store sales declined.
3M (MMM) posted earnings of $1.38 per share, vs. $1.28 a year ago, as sales rose 8.9%.
Motorola (MOT) reported a loss of 9 cents per share, vs. a 9 cents loss a year ago, as revenue fell 21%.
Whirlpool (WHR) reported earnings of $1.22 per share, vs. $1.55 a year ago. The home appliances maker cited higher material costs, oil-related price inflation and negative growth in demand in the U.S.
LAM Research (LRCX) reported earnings of 82 cents per share, vs. $1.15 a year ago, as revenue fell 5.6%.
Northrop Grumman (NOC) posted earnings of 76 cents per share, vs. $1.10 a year ago, as sales rose 6%. The company lowered profit guidance for the full year by 60 cents per share, but raised its quarterly dividend from 37 to 40 cents per share.
Aetna (AET) posted earnings of 92 cents, vs. 81 cents a year ago, as revenue rose 16%. It reaffirmed previous profit guidance.
Range Resources (RRC) reported earnings of just 1 cent per share, vs. 51 cents a year ago, even as oil and gas sales rose 41%.
Hershey Company (HSY) posted earnings of 37 cents per share, vs. 51 cents a year ago.
Major European indexes were mixed Thursday. In London, the FTSE 100 index fell 0.54% to 6,050.70. Paris' CAC 40 index lost 0.31% to 4,929.55, and Germany's DAX index rose 0.39% to 6,821.32.
In Asia, Japan's Nikkei 225 was off 0.28% to 13,540.87, while Hong Kong's Hang Seng index gained 1.55% to 25,680.78.
Treasuries fell in price Thursday. Standard & Poor's says the "surprise drop in weekly jobless claims overshadowed weak March durable goods orders and new home sales." The 10-year note sank 25/32 to 97-10/32 for a yield of 3.83%, while the 30-year bond tumbled 31/32 to 97-02/32 for a yield of 4.56%.