Stocks Finish Mixed

Thursday will bring more earnings news and economic data, including weekly jobless claims, housing starts, and a Fed report on the manufacturing sector

Stocks finished mixed Wednesday, leaving the Dow lower and the Nasdaq slightly higher as investors digested more economic data and earnings news after two straight days of strong gains.

The Nasdaq Composite managed to cling to positive territory and ended with a gain of 6.51 points, or 0.38%, to 1,725.56.

Meanwhile, the Dow Jones industrial average fell 54.50 points, or 0.53%, to 10,243.68. And the broader Standard & Poor's 500 index lost 6.21 points, or 0.57%, to 1,091.07.

On Thursday, a number of economic reports will be released, including housing starts and building permits, along with weekly initial claims for unemployment benefits. The Philadelphia Federal Reserve index, a regional survey on manufacturing activity, is also coming out.

A few retailers will post earnings results Thursday, including Dillard's (DDS ) and Lands' End (LE ), which on Monday agreed to be acquired by Sears (S ). This comes on the heels of quarterly reports from Ann Taylor (ANN ) and Nordstrom (JWN ) after the market close Wednesday.

Also after the close, Intuit (INTU ) reported third quarter EPS of $0.75 a share, three cents above the consensus forecast. Revenues rose 28% to $545.2 million. Based on strong third quarter performance, the software maker raised the low end of its 2002 guidance ranges for EPS and revenues.

On Wednesday, three economic reports garnered some attention. The April consumer price index, a measure of inflation at the consumer level, rose 0.5%, meeting the forecast from S&P MMS but a notch higher than the consensus estimate. The core index, which excludes volatile food and energy prices, rose 0.3%, higher than expected. Energy was the focal point of these above-forecast gains, with energy up 4.5% and gasoline up 10.1%, while tobacco also rose 6.5% and medical care gained 0.5%. Despite the rise in energy prices, overall trends in commodity prices, pricing power, and productivity appear likely to keep inflation and the Fed restrained ahead, says S&P MMS.

March business inventories fell 0.3% in March, a bit lower than expected, after a revised 0.2% decline in February (-0.1% previously). That's the fourteenth straight decline and puts inventories at the lowest level since October 1999.

In addition, industrial production rose 0.4% in April, after a revised 0.4% gain in March (+0.7% previously). Capacity utilization rose to 75.5% in April from a revised 75.3% (75.4% previously). The report was close to expectations. S&P MMS expects the industrial rebound to continue at least until inventories are restocked to sustainable levels around the third quarter.

Investors also had plenty of earnings reports to digest. After the market close Tuesday, chip equipment maker Applied Materials (AMAT ) reported second quarter earnings of $0.03 per share, a penny better than the consensus estimate. Revenues fell 45.9% from a year ago to $1.16 billion, while new orders of $1.69 billion increased 51% from the first fiscal quarter of 2002.

Computer and printer maker Hewlett-Packard (HPQ ) reported second quarter EPS of $0.25, a penny below the consensus estimate. Revenue fell 16% to $10.62 billion, less than the consensus forecast of $11.14 billion. The company says it is not counting on a meaningful improvement in IT spending until 2003.

Network Appliance (NTAP ) posted fourth quarter EPS of $0.04 (pro forma), vs. $0.02 a year ago, as lower total operating costs offset 9.2% revenue decline.

Among sector moves, pharmaceutical stocks were lower after Abbott Labs (ABT ) says it has been informed by the U.S. Food and Drug Administration that its Lake County diagnostic manufacturing operations will be found not in conformity with Quality System Regulation.

Schering-Plough (SGP ) shares also fell after it disclosed in a SEC filing that the FDA's Office of Criminal Investigation in Puerto Rico is conducting an investigation that may focus on more than one of its products. Schering-Plough makes the top-selling allergy drug Claritin.

Energy stocks were also notably lower as crude oil prices fell on an American Petroleum Institute report that showed inventories falling less than expected.

Treasury Market

U.S. Treasuries broke their losing streak and closed higher, overcoming a rise in core CPI, a spate of non-government supply and a resilient Nasdaq, says S&P MMS.

World Markets

European stock markets ended higher. In London, the Financial Times-Stock Exchange 100 closed with a gain of 19.60 points, or 0.37%, to 5,070.06. April unemployment rose 5,400 to 3.2% in a surprise increase; most had looked for decrease for the fourth consecutive month.

In Germany, the DAX Index gained 20.98 points, or 0.42%, to 5,038. And in France, the CAC 40 gained 24.15 points, or 0.54%, to 4,471.27 as French industrial production rose for the third consecutive month in March.

In Asia, the markets ended sharply higher on the heels of the strong rally in U.S. markets on Tuesday. In Japan, the Nikkei jumped 286.78 points, or 2.53%, to close at 11,642.97, led by NTT and IT-related shares. In Hong Kong, the Hang Seng gained 148.05 points, or 1.27%, to close at 11,838.36.

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