Stocks romped to close at session highs Thursday on some positive economic reports -- on weekly initial jobless claims and leading economic indicators.
The major indexes were hardly bothered by the resignation of the head of the New York Stock Exchange or Hurricane Isabel, which is winding its way up the east coast.
The storm may take a toll on activity as companies based in regions hit hard by the weather could shut down operations. By contrast, the turmoil over the governance of the NYSE won't likely affect daily activity, as evidenced by Thursday's market action.
The Dow Jones industrial average added 113.48 points, or 1.19% to 9,659.13, hitting a 15-month high. The broader Standard & Poor's 500 index added 13.60 points, or 1.33%, to 1,039.58. The tech-heavy Nasdaq composite climbed 26.45 points, or 1.40%, at 1,909.55.
The markets were abuzz with the latest turn of events for Richard Grasso, head of the NYSE. He resigned Wednesday evening under intense pressure. Grasso was widely regarded as a capable leader, but his $140 million pay put a spotlight on the exchange's dual role as regulator and for-profit securities market. The matter is likely to be a continuing saga, despite his departure.
Investors rallied around economic news Thursday. Weekly initial jobless claims are likely to be the data event of most interest. Claims fell 29,000 for the week of Sept. 13, to 399,000, marking the first time in four weeks that the reading has declined. Economic research outfit MMS International had expected that claims would drop 12,000 to 410,000 for the week.
The index of leading economic indicators rose to 0.4% in August, as expected. This marks the fourth straight monthly increase in leaders, which is consistent with the rebounding economy.
Meanwhile, the release of minutes from the Aug. 12 FOMC meeting revealed that Federal Reserve policymakers saw a likelihood that interest rates would stay low longer than usual because of a need to hike output and resist disinflation.
No data are due Friday. And next week's key data will come toward the end of the week. However, there will be plenty of commentary by Fed officials to take up the slack starting Monday when Fed Governors Ben Bernanke and Olson will speak, along with President Guynn. Chairman Greenspan will speak on economic education next Thursday.
On Friday, investors will digest earnings reports from Nike and (NKE ) and 3Com (COMS ) -- both due after Thursday's market close.
Contract maker of tech products Jabil Circuit (JBL ) said after the market close Thursday that quarterly net income rose from a year earlier as revenue also grew. Net income rose $20.1 million, or 10 cents a share, up from $1.8 million, or 1 cent a share, in the same quarter last year. Revenues rose to $1.3 billion, from $1 billion a year earlier.
CarMax (KMX planned to report earnings Friday, but recently decided to postpone the release amid worries over Hurricane Isabel.
A number of companies reported earnings Thursday. Bear Stearns (BSC ) reported that third-quarter profit nearly doubled, on strength in its bond business. Its results lifted financial stocks.
Uniform maker Cintas (CTAS ) said first-quarter net income rose 2.7%. The company reiterated its previous fiscal 2004 guidance, despite the sluggish economy.
Treasuries finished down as stocks rallied. Solid updates on leading indicators and jobless claims were catalysts. Trading has been light and a short-covering bounce did not last. Given risk of even lighter volumes in the Northeast Friday, the potential for gains remains limited. "The claims decline may have been the pretext, but the fast approach of the weekend and Hurricane [Isabel] are getting dealers' attention and trading volumes are expected to dwindle into [Friday]," says MMS.
Many fear hurricane Isabel may force insurance companies to liquidate a portion of their Treasury holdings to pay for the rebuilding.
In other economy news Thursday, FOMC meeting minutes revealed that Fed officials are looking at a longer than usual period of low interest rates.
The September Philadelphia Fed manufacturing index fell to 14.6 in September after jumping to 22.1 in August. The data are generally in line with expectations, says MMS.
European stock markets finished higher, with help from gains in the likes of Bayer and Axa. London's Financial Times-Stock Exchange 100 index gained 21.70 points, or 0.51%, to 4,314.70. In Paris, the CAC 40 gained 21.08 points, or 0.62%, to 3,415.01. Germany's DAX index added 51.25 points, or 1.44%, trading at 3,612.28.
Asian stock markets finished mixed Thursday. Japan's Nikkei 225 index climbed 43.21 points, or 0.39%, to 11,033.32. In Hong Kong, the Hang Seng index shed 70.83 points, or 0.64%, to finish at 11,069.22.
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