Economic News, Surge in Biotech Push Up Indexes
After waffling most of the day on fears of more terror attacks, stocks turned solidly higher late in the session Thursday, buoyed by positive economic news and a surge in biotech shares.
The gains followed an unexpected rise in orders for big-ticket items and a drop in initial unemployment insurance claims, and analysts said the market appeared to be doing its best to prevent fears about terrorism from overshadowing upbeat economic news.
However, fresh violence in Israel, a standoff between nuclear powers Pakistan and India and concerns about U.S. vulnerability to more terror attacks unnerved investors and spurred a rise in gold prices to a 21/2-year high. Trading is likely to be light today ahead of the three-day Memorial Day weekend.
“There’s a heightened awareness of terrorism, and the global issues are part of the negative cast. There are all kinds of little hot spots to cause a problem,” said Mike Vogelzang, chief investment officer at Boston Advisors, which has boosted its cash holdings instead of buying stocks amid worries more turmoil could cause stocks to tumble.
The Dow Jones industrial average gained 58.2 points, or 0.6%, to 10,216.08, adding to Wednesday’s 52-point gain. The technology-focused Nasdaq composite index advanced 24.18 points, or 1.4%, to 1,697.63, and the Standard & Poor’s 500 index was up 11.06 points, or 1.0%, at 1,097.08.
Winners led losers by about 3 to 2 on Nasdaq and the New York Stock Exchange. Trading volume, though moderate, was higher than recent levels.
The Commerce Department reported that orders for big purchases, including cars and communications equipment, jumped 1.1% in April, a bigger increase than expected. It was the fifth straight month that orders for durable goods rose. A separate report from the Labor Department showed that jobless claims dropped by 9,000 to 416,000 last week, the lowest level in eight weeks.
Biotechnology shares helped boost major market indexes after a U.S. advisory panel gave its backing for Biogen’s Amevive, a drug to treat the hard-to-cure skin disease psoriasis.
The drug is viewed as crucial to the company’s future growth. Nasdaq did not allow trading in Biogen shares all day.
This was one of the most closely watched drug approvals for one of the country’s biggest biotech companies. The sector has been hit by a wave of Food and Drug Administration product rejections since the start of the year. The Amex biotech index leaped 7.4%.
Although biotech shares rallied, technology stocks were mixed. Ciena dropped 36 cents to $6.08 on weak second-quarter sales and a warning that the third quarter also could be disappointing. But Microsoft jumped $1.13 to $54.82 and Cisco Systems gained 34 cents to $16.90.
Among blue chips, Boeing dropped 26 cents to $44.15 on news it will deliver eight fewer wide-body jets than expected next year.
In other market news:
* Gold prices rose above $320 for the first time in 21/2 years, gaining $4.50 to $322.50 an ounce as edgy investors around the world sought a safe haven for cash. Shares of gold companies also gained as investors bet that higher gold prices would drive up corporate profits.
Barrick Gold advanced 48 cents to $23.16, and Placer Dome rose 50 cents to $14.38.
* Semiconductor stocks were among the worst performers on the belief that prices for technology companies still were too high given the slow economic recovery. Intel dropped 20 cents to $29.39, and chip equipment maker Applied Materials lost 59 cents to $25.57. The SOX index of semiconductor stocks fell 0.6%.
* Graphics chip designer Nvidia fell $2.32 to $35.73. The company reported strong quarterly earnings, but a run-up in the stock before the report and guidance that may have been weaker than expected hurt the shares. The stock had surged about 21% from May 6 to Wednesday’s close.
* NetFlix.com rose $1.75, or 12%, to $16.75 in its first day of trading on Nasdaq. The Los Gatos-based DVD-rental company raised $82.5 million in its initial public stock offering.
* Krispy Kreme rose $1.55 to $41.10 after reporting first-quarter results slightly ahead of expectations.
Market Roundup, C6-7
