Stocks End Sharply Higher
Stocks posted their biggest gains thus far in 2003 Thursday in heavy-volume trading as the White House said it might wait until next week to seek a U.N. resolution on Iraq to fully disarm or face war. Meanwhile, reports that Iraqi troops were talking to the CIA about possibly surrendering rather than facing U.S. forces suggests that a war might be a quick ordeal.
With a final decision on war just days or weeks away, however, the stock market is expected to remain under pressure until the crisis subsides or reaches a conclusion.
The Dow Jones industrial average Thursday climbed 269.68 points, or 3.57%, to 7,821.75, while the broader Standard & Poor's 500-stock index rose 27.71 points, or 3.45%, to 831.90. Thursday's rally was especially strong among tech stocks as evidenced by the performance of the tech-laden Nasdaq composite index -- a gain of 61.54 points, or 4.81%, to 1,340.78.
The stock market seemed to ignore the economic reports released Thursday morning. The government released data on initial jobless claims for the first week of March fell 15,000 to 420,000 -- a positive sign for the employment market, but still evidence that "employers may be waiting for political uncertainty to be resolved before committing to hiring new staff," wrote Moody's managing director John Lonski in his daily economic report. Separately, February retail sales fell 1.6%, which reflected sluggishness in consumer spending. Excluding autos, sales declined 1%. Among other data released Thursday, import prices climbed 1.3%, the Commerce Department reported.
On Friday, investors will digest economic data on January business inventories, February producer prices, industrial production, and preliminary figures for the University of Michigan Consumer sentiment survey for March.
Several companies were set to release earnings after the close of trading Thursday, including Adobe Systems (ADBE ), which said it beat its own earnings and sales targets; WebMD (HLTH ), which narrowed its fourth-quarter loss to $2.4 million based on higher revenues; and Verity (VRTY ), which had net income of $3.7 million on sales of $27.8 million.
In company news Thursday, Tyco International (TYC ) cut its 2003 profit estimate because of lower margins and as much as $325 million in costs related to accounting irregularities at its fire and security unit. Tyco fired that unit's president, Jerry Boggess.
Applied Materials (AMAT ) and Intel (INTC ) climbed after the Semiconductor Equipment Association of Japan said worldwide sales of chip- making equipment rose 17.2% in January from a year ago, the fifth consecutive gain after 18 months of declines.
International Paper (IP ) said analysts' estimates of the company's profits for this year are too high, citing soft demand for some of its products.
Baxter International (BAX ), a medical devices maker, fell sharply after the company said it received a U.S. subpoena in an investigation of deaths of patients who used the company's kidney-dialysis filters.
Shares of Hewlett-Packard (HPQ ) were down after the technology giant restated first-quarter cash flow from operations 18% lower because of an accounting error.
Comverse Technology (CMVT ), the maker of telephone voice-mail software, said its fourth-quarter loss narrowed to 16 cents a share, from 29 cents a year earlier because of lower costs.
Discount broker Charles Schwab (SCH ) warned for a second time that analysts' profit forecasts for the company's first quarter are too high.
Treasuries ended Thursday's session sharply lower in price. Unwinding of the war premium again took a heavy toll in another rumor-driven session, notes MMS International. Market sources cited by MMS reported large asset allocation trades from leveraged accounts out of Treasuries and into equities.
European stocks rose from 6-year lows hit earlier this week. Royal Philips Electronics climbed after saying it will shed jobs to cut costs, and Fortis gained as the financial company said it will pay a dividend in cash, not shares.
In London, the Financial Times-Stock Exchange 100 index climbed 199.90 points, or 6.08%, to 3,486.10. In Germany, the DAX index rose 151.35 points, or 6.87%, to 2,354.31, while France's CAC 40 index gained 151.67 points, or 6.31%, to 2,554.71.
German chemical giant Bayer warned its insurance may be insufficient to cover litigation costs related to its cholesterol drug Baycol, casting a deeper shadow over its prospects even as it reported a 9.8% rise in full-year profit.
BMW's profit rose 8.3% in 2002 as a tax benefit brought record earnings. The company's sporty luxury cars continued to draw customers despite uncertain global economic conditions.
Asian markets, however, fell about 1%. In Tokyo, the Nikkei 225 index finished down 74.48 points, or 0.94%, to close at 7,868.56, after reaching a 20-year low point earlier this week.
In Hong Kong, the benchmark Hang Seng index fell 87.54 points, or 0.99%, to close at 8,787.45.