Major stock indexes rebounded Thursday from a sell-off in the previous session as traders were likely heartened by a surge in the June Philadelphia Fed manufacturing index and retreating energy prices. Meanwhile, bond yields continued their climb amid growing concerns over losses at subprime hedge funds run by Bear Stearns Cos. (BSC).
On Thursday, the Dow Jones
industrial average was up 56.42 points, or 0.42%, at 13,545.84. The broader S&P 500
index added 9.35 points, or 0.62%, to 1,522.19.
The tech-heavy Nasdaq
Composite index gained 17 points, or 0.65%, to 2,616.96.
In the financial sector, The Wall Street Journal said that the liquidation of assets by the two Bear Stearns hedge funds has forced other investment banks to halt or reduce their own asset sales in favor of dealing directly with Bear Stearns. Action Economics reports that Merrill Lynch (MER) has confirmed that so far it has only liquidated $100 million of the $850 million in Bear fund collateralized debt obligations (CDO) assets put up for auction Wednesday. "That implies that there remains some heavy lifting yet to do on these complex securities," says Action.
On the economic front, the Philadelphia Fed index, a regional gauge of manufacturing conditions, rose to higher than expected 18.0 level in June from 4.2 in May, the index of Leading Economic Indicators rose 0.3%.
Meanwhile, initial jobless claims rose 10,000 to 324,000 for the week ended June 16. The gain was well within normal week-to-week volatility, but it pushed total claims above a narrow range of 309,000 to 314,000 seen over the last four weeks.
The market weighed a report that the May index of leading economic indicators rose 0.3%, reversing its April decline. The increase was
slightly above the market consensus of 0.2%.
In the energy markets Wednesday, August WTI crude futures, which approached the $70 level in early trading, pulled back later in the session, falling 21 cents to $68.65 on profit taking, fund selling, and lingering worries about the recent inventory surge.
Among stocks moving Wednesday, PrivateBancorp Inc. (PVTB) shares fell after it said it expects non-performing assets as a percentage of total assets to double to around 0.70% in the second quarter from 0.34% at the end of the first quarter. The bank also warned about additional expenses from resolving these credits, as well as a higher loan-loss provision in the second quarter.
Pier 1 Imports (PIR) reported a net loss of 64 cents a share in the first quarter, vs. a loss of 27 cents a share a year ago, on a 5.4% drop in same-store sales and a total sales decline of 5.2%. The furniture retailer said it now plans to close 100 stores instead of 60 and cut jobs, which will result in additional expenses of $10 million starting in the second quarter.
J.M. Smucker Co. (SJM) posted a 19% jump in fiscal fourth quarter earnings to 75 cents a share, from 62 cents a share a year earlier, as higher net sales, gross margin improvements, and reduced merger and integration costs offset a 1.6% drop in sales. Despite higher costs, it sees earnings in line with its long-term objective.
MySpace founder Brad Greenspan has thrown his hat in the ring for Dow Jones & Co. (DJ), saying he will lead an investment group in a bid to buy an 25% equity stake in the publisher of The Wall Street Journal for $60 per share. Separately, Dow Jones said its board is taking over negotiations from the Bancroft family regarding News Corp. (NWS) bids.
European stock markets ended lower on Thursday. In London, the FTSE 100 index was down 0.8% to 6,596. Germany's DAX index fell 1.55% to 7,964.71. In Paris, the CAC 40 index was off 1.04% at 6,029.79.
Asian markets moved higher on Thursday, with many indexes hitting multi-year highs. In Japan, the Nikkei index was up 0.16% to 18,240.30, a seven-year high. In Hong Kong, the Hang Seng
index was 1.25% higher at 21,954.67. In China, the Shanghai Composite index rose 1.18% to 4,230.82.
Treasuries weakened Thursday, extending Wednesday's losses in response to concerns over increased supply in the fixed income markets following the troubles with hedge funds concerned with subprime mortgage derivatives. The 10-year note fell modestly, driving the yield up to 5.16%. The 30-year bond also closed down for a yield of 5.28%.
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