Dow, S&P Shrug Off China to Hit Records
Stocks were expected to open higher on Thursday, a day after a late-afternoon rally broke a seven-year closing record for the S&P 500.
It's not clear whether the S&P 500's move past 1,527.46, its previous high from March 2000, will boost investor confidence or give traders an excuse to sell. The markets will also digest news that the economy grew slower than expected in the first quarter. A couple more M&A deals were also announced Thursday, with A.G. Edwards and Ceridian as buyout targets.
On Wednesday, the Dow Jones industrial average was up 0.83%, or 111.74 points, to 13,633.08. The broader S&P 500 index, was up 0.80%, or 12.12 points, to 1,530.23.
The tech-heavy Nasdaq Composite index was up 20.53 points, or 0.80%, to 2,592.59.
U.S. gross domestic product growth was 0.6% in the first quarter, revised down from 1.3% previously and slightly weaker than many expected. Action Economics doesn't expect a big impact from the GDP data, because the first quarter is "history" and "we've already seen signs [second quarter] growth has picked up." Standard & Poor's says the GDP figure reduces the chances the Federal Reserve might even consider a hike in interest rates and puts some pressure on the Fed to ease rates.
U.S. jobless claims met expectations in the week ended May 26, falling to 310,000 from a revised 314,000. Claims remain at relatively low levels, Action Economics says.
In the energy markets, July crude oil futures on the NYMEX were down 25 cents to $63.24.
Among stocks moving on Thursday, A.G. Edwards (AGE) agreed to be acquired by Wachovia (WB). The terms are 0.9844 Wachovia shares and $35.80 in cash for each A.G. Edwards share. Based on Wednesday's closing price, the deal values A.G. edwards at $89.50 per share, a 16% premium.
Northwest Airlines (NWA) emerged from bankruptcy and began trading on the New York Stock Exchange.
Ceridian Corp. (CEN) agreed to be acquired by Thomas H. Lee Partners and Fidelity National Financial in a $5.3 billion deal. Many had already assumed the firm would be sold, so the $36-per-share offer is a relatively small premium on Wednesday's closing price of $34.19.
Payless Shoesource (PSS) was higher in pre-market trading after it reported earnings of 59 cents in the first quarter, vs. 53 cents a year ago. Same-store sales were up 5%, total sales were 4.9% higher and the firm says a pending acquisition of Stride Rite (SRR) should add to earnings in fiscal 2008.
Yahoo Inc. YHOO announced chief technology officer Farzad Nazem was resigning effective June 8. Also, JP Morgan reportedly upgraded Yahoo's stock from neutral to overweight.
European stock markets were moving higher on Thursday. In London, the FTSE 100 index was up 0.53% to 6,637.30. Germany's DAX index was up 1.49% to 7,880.61. In Paris, the CAC 40 index moved 1% higher to 6,102.78.
Asian markets were higher after Wednesday's crash in China's markets. In Japan, the Nikkei index was up 1.63% to 17,875.75. In Hong Kong, the Hang Seng Index was up 1.68% to 20,634.47. After a 6.5% sell-off on Wednesday, China's Shanghai Composite index was up 1.4% to 4,109.65.
Treasury notes were down slightly on Thursday. The 10-year Treasury note was off 02/32 to 97-03/32 for a yield of 4.878%; the 2-year note was flat at 100 for yield of 4.892%; and 30-year bonds were off 02/32 at 96-03/32 for yield of 5.007%.
Standard & Poor's says 10-year bond yields could move closer to 5% if today's reports on Chicago Purchasing Managers Index and construction spending are stronger than expected.