Stocks Finish Higher

Oil prices continued their climb while Treasuries gained strength

Major stock indexes finished higher Thursday, despite an unexpected decline in the June Philadelphia Federal Reserve Index, and a rise in oil prices. Basic materials and energy sectors led the gains.

The Dow Jones industrial average rose 12.28 points, or 0.12%, to 10,578.65. The broader Standard & Poor's 500 index rose 4.35 points, or 0.36%, to 1,210.93. The tech-heavy Nasdaq composite index gained 14.23 points, or 0.69%, to 2,089.15.

In the energy markets, West Texas Intermediate oil settled up $1.01 at $56.58 a barrel.

Investors received reports on the U.S. housing sector and the labor market Thursday morning. U.S. housing starts rose a modest 0.2% to a 2.009 million pace in May, just under expectations of a 2.046 million rate but above April's downwardly revised 2.005 million pace (previously 2.038 million). Building permits dropped 4.6% to a 2.05 million rate from the upwardly revised 2.148 million pace in April (2.129 million before). While a little weaker than expected, the pace remains robust with housing getting more support from the low interest rate environment, says Standard & Poor's economist Beth Ann Bovino.

Meanwhile, U.S. initial jobless claims rose 1,000 to 333,000 for the week ended June 11, from 332,000 the prior week (revised from 330,000). The 4-week moving average edged up to 335,000 from 332,250. The data are not too surprising and shouldn't impact the markets greatly, says Action Economics.

The June Philadelphia Fed Index, a gauge on the manufacturing sector, dropped to -2.2 after falling 18 points in May to 7.3. The numbers are well below expectations and the first negative reading in more than two years, according to Action Economics.

In company news Thursday, Pfizer (PFE ) was a bit higher after agreeing to buy biotech concern Vicuron for $1.9 billion in cash.

Carmaker General Motors (PFE ) was 3% lower after a media report said that its union was resisting benefit cuts.

Goldman Sachs (GS ) shares were up even after the investment bank reported second-quarter earnings below expectations. The bank posted earnings of $865 million, or $1.71 a share, down from $1.19 billion, or $2.31 a share, a year ago.

Meanwhile, rival Morgan Stanley (MWD ), which recently said its second quarter earnings fell as much as 20%, was higher amid a Wall Street Journal report that dissident shareholders are considering proxy fights against individual directors as they come up for election.

Boeing (BA ) was slightly lower even though the company won an order from Alaska Airlines valued at as much as $2.3 billion for 35 of the company's 737-800 planes.

There was some nervousness in the market Thursday about a Wall Street Journal report that accounting firm KPMG could face criminal charges for obstruction of justice and the sale of abusive tax shelters, reports S&P MarketScope.

Treasury Market

Treasuries, which were trading lower in the morning, posted gains following the weaker than expected June Philadelphia Fed Index, according to Action Economics. The yield on the 10-year note finished at 4.06%.

World Markets

European markets closed higher Thursday. London's FTSE 100 index was up 25.50 points, or 0.51%, to 5,045.00, with little market reaction to a report showing British May retail sales rose 0.1%, after rising 0.5% in April.

In France, the CAC 40 was up 0.79 points, or 0.02%, to 4,185.15. Havas was higher after shareholder Vincent Bollare raised his stake in the company, while LaFarge was higher after Merrill Lynch upgraded the materials group to buy from neutral.

Germany's DAX index rose 31.45 points, or 0.69%, to 4,579.87. HVB group, which is the subject of a bid from Unicredito Italiano, was up on rumors that France's BNP-Paribas was also interested in the bank and DAB bank was also higher on rumors sparked by the HVB deal.

Asian markets closed mixed Thursday. Hong Kong's Hang Seng Index declined 80.77 points, or 0.58%, to 13,833.53. China Mobile, HSBC Holdings and Hutchison Whampoa were among the decliners.

In Japan, the Nikkei 225 ended virtually flat, up 0.50 points to 11,416.38. Banking shares extended gains a day after Nikko Citigroup upgraded the sector.

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