Stocks Finish with Gains

Investors are looking to Friday's release of the March employment report for direction. Economists are forecasting 123,000 new jobs

Stocks finished with gains Thursday following several economic reports that beat expectations.

After a slow start, the major indexes climbed amid solid economic headlines. The Dow Jones industrial average added 15.63 points, or 0.15%, to 10,373.33. The broader Standard & Poor's 500-stock index gained 5.96 points, or 0.53%, to 1,132.17. The tech-heavy Nasdaq composite index rose 20.78 points, or 1.04%, to 2,015.

The Dow average was also a focus of market attention Thursday. Dow Jones (DJ ) said it will make its first changes since 1999 to the blue-chip benchmark. Effective Apr. 8, American International Group (AIG ), Pfizer (PFE ), and Verizon Communications (VZ ) will replace AT&T Corp. (T ), Eastman Kodak (EK ), and International Paper Co. (IP ).

The changes to the index reflect shifting U.S. business trends. While financial services and health care continue to grow, basic materials have become a smaller part of the economy and the stock market. "It strengthens the credibility of the index," says Jim Fisher, portfolio manager at Univest Corp. in Souderton, Penn., adding that the ousting of Kodak was long overdue.

Several retailers reported earnings late Wednesday and Thursday. Pier 1 Imports (PIR ) said quarterly profit fell more than 10% amid faltering sales during the holiday season.

Bed Bath & Beyond (BBBY ) reported a 37% rise in quarterly earnings, beating analysts' expectations.

Luxury retailer Gucci Group (GUC ) said retail sales rose 15.5% for its Gucci division in the fiscal fourth quarter, helped by a 25.2% gain in the U.S.

Merrill Lynch says it is growing cautious on the retail sector. It cut ratings on ratings on Wal-Mart (WMT ), Dollar Tree Stores (DLTR ), Family Dollar Stores (FDO ), Neiman Marcus Group (NMG.A ), Target Corp. (TGT ), AnnTaylor Stores (ANN ), and Zale Corp. (ZLC ).

On the tech front, Swedish telecom-equipment outfit Ericsson (ERICY ) said profit margins in the first quarter would be rise from the fourth quarter.

In economic news, gains in U.S. wholesale prices were tame in February, a sign that inflation is not a concern. The Producer Price Index, which measures prices paid to farms, factories and refineries, rose 0.1% in February, below the 0.4% increase economists on Wall Street had forecast.

The Institute for Supply Management said its national manufacturing index came in at 62.5 in March, better than economists predicted and marking a 10th straight month of expansion.

Weekly jobless claims dipped by 3,000 to 342,000 in the week ended March 27, from a revised 345,000 the prior week. The data suggest that sluggish U.S. labor market may be improving.

A report on payrolls for March -- the week's most anticipated economic release -- is the main event Friday. "It will probably take a non-farm payrolls gain of at least 120,000, preferably 150,000, or higher to ignite buying and short-covering," says Paul Cherney, chief market analyst at Standard & Poor's.

Economists on average are predicting a rise of 123,000 new jobs. The data are due at 8:30 Friday morning.

Many analysts are optimistic that employment is on the mend even as the average duration of unemployment is disturbingly high. Though jobless claims are now at a three-year low, the "real stickler is new jobs created," Univest's Fisher says. Even so, he figures that the "stage is set" for jobs growth. "The next couple months will be key. From what we hear from companies, they are hiking up hiring."

No major corporate earnings reports are due Friday.

Treasury Market

Treasuries declined in price amid the latest economic reports showing economic strength, including a drop in jobless claims in the previous week and low inflation.

In other economic data, construction spending fell 0.1% in February, down from January's flat growth, which is somewhat lower than expected.

World Markets

European stock markets finished higher Thursday despite the European Central Bank's decision not to lower interest rates. Positive comments from Ericsson helped bolster the market.

London's Financial Times-Stock Exchange 100 index added 25 points, or 0.57%, to 4,410.70.

Germany's DAX index gained 68.15 points, or 1.77%, to 3,924.85. In Paris, the CAC 40 increased 44.75 points, or 1.23%, to 3,669.98.

In Asia, markets finished lower. The Nikkei 225 index shed 31.97 points, or 0.27%, to 11,683.42, amid worry over the yen's advance against the dollar despite a Bank of Japan's report showing rising corporate confidence. In Hong Kong, the Hang Seng index lost 5.42 points, or 0.04%, to 12,676.25.

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