Stocks Rebound on Econ Data, Chip Strength
Stocks finished higher Wednesday, led by big gains in semiconductors and other technology stocks as investors digested mixed economic news. Energy and transport groups were also higher, says Standard & Poor's MarketScope.
The Dow Jones industrial average rose 60.12 points, or 0.55%, to 11,059.13. The broader Standard & Poor's 500 index moved higher 10.58 points, or 0.83%, to 1,291.24. The tech-heavy Nasdaq composite index climbed 33.25 points, or 1.46%, to 2,314.64.
Mutual fund inflows due to the beginning of the month may also have helped stocks, says Roger Volz, chief technical analyst at New York-based Swiss American Securities, a subsidiary of Credit Suisse (CSR).
But the weakness the markets showed in Tuesday's selloff might not be over yet, other analysts say. "For the near term, at least, the path of least resistance appears to be down," says Richard Dickson, senior market strategist for Lowry's Reports.
Positive analyst remarks helped buoy chip stocks Wednesday. Texas Instruments (TXN) led the rally, climbing 8% after reports Goldman Sachs expects the company to raise its financial outlook next week. Advanced Micro Devices (AMD) gained nearly 4%, while Intel (INTC) rose 1% despite reduced earnings estimates from (J.P. Morgan) (JPM ).
Investors were also sifting through a mixed bag of economic data. The ISM index of industrial activity jumped to a better-than-expected 56.7 in February after dropping to 54.8 in January. Construction spending rose a weaker-than-expected 0.2% in January after a 1.0% increase in December.
The ISM data could point to further Fed tightening. The survey is "consistent with further rate hikes at the March, May and June FOMC meetings," says John Ryding, chief U.S. economist for Bear Stearns.
Earlier in the session, the Commerce Department reported that personal income rose 0.7% in January, while spending climbed 0.9%. Both figures are close to expectations, says Action Economics.
On the economic docket Thursday, initial jobless claims are expected to rise 2,000 to 280,000 for the week ended Feb. 25, says Action Economics.
In corporate news Wednesday, Internet search giant Google (GOOG) finished modestly higher after tumbling 7% during the previous session. The company issued a statement late Tuesday saying improvements to the way it generates revenue from its websites will still be instrumental in driving sales growth.
February domestic vehicle sales figures came in mixed. General Motors (GM) reported a 3% decline in sales, narrowly beating expectations, but shares dipped 2%. Ford (F) fell slightly after posting a 4% sales drop, weaker than Street estimates. DaimlerChrysler (DCX) moved 2% higher after reporting a better-than-expected 4% sales increase. Outside the Big Three, Toyota (TM) was little changed after missing forecasts with only a 2% sales increase.
Hewlett-Packard (HPQ) gained nearly 4%, leading the Dow. The computer maker also said competitor Gateway (GTW) agreed to pay it $47 million to settle a patent dispute.
Among other blue-chips, Exxon Mobil (XOM) ticked almost 2% higher following a report the oil conglomerate's four-year dispute with Indonesia's state oil company over a $2 billion oil project may end this week.
Pharma stalwart Pfizer (PFE) drooped slightly on reports that a study from New Zealand found that heart-attack risk nearly doubles for patients using the company's Celebrex arthritis drug compared to rival drugs.
Among other companies in the news, Sirius Satellite Radio (SIRI) was down more than 1% after a division of CBS (CBS) sued Howard Stern on Tuesday. CBS Radio alleges the shock jock breached his contract when he jumped to Sirius.
In the energy markets Wednesday, April West Texas Intermediate crude oil futures settled 56 cents higher at $61.97, despite a weekly inventory report showing supplies rose 1.6 million barrels, as uranium enrichment talks between Iran and Russia made little progress.
European markets finished sharply higher. In London, the Financial Times-Stock Exchange 100 index rose 52.6 points, or 0.91%, to 5,844.1. Germany's DAX index added 70.57 points, or 1.22%, to 5,866.61. In Paris, the CAC 40 index climbed 57.16 points, or 1.14%, to 5,057.61.
Asian markets finished lower. Japan's Nikkei 225 index fell 240.97 points, or 1.49%, to 15,964.46. In Hong Kong, the Hang Seng index dipped 100.39 points, or 0.63%, to 15,818.09. Korea's Kospi index was closed for a holiday after ending Tuesday down 3.29 points, or 0.24%, to 1,371.59.
Prices for 10-year Treasury notes were lower in afternoon trading at 99-09/32 with a yield of 4.59%, while 30-year bonds fell to 99-00/32 for a yield of 4.56%. The yield curve was inverted.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.