Stocks Rise Modestly Before Blackout
Stocks managed to slip across the finish line Thursday with modest gains only minutes before a giant power outage blacked out much of the Northeast -- including Wall Street.
The power failure, which cut off electricity to cities from New York to Cleveland, Detroit and Toronto, sent stock exchanges scrambling to switch to backup power generators. The New York Stock Exchange, Nasdaq and the American Stock Exchange all said they intended to open on schedule today, using backup generators if needed.
During the day’s trading session, stocks recouped some of their losses from Wednesday, when a big sell-off in the bond market spilled over to the equity market.
“The fact that [bond] interest rates are going up on better-than-expected economic data is not a negative for the stock market, but actually a plus,” said Peter Cardillo, president and chief strategist of Global Partner Securities Inc. “Rates are going up because ... of an expected pickup in economic activity.”
After falling almost 53 points in the early going, the Dow Jones industrial average closed up 38.80 points, or 0.4%, at 9,310.56, according to preliminary calculations shortly before the power failure occurred.
The broader market also was higher. The technology-laden Nasdaq composite index rose 13.73 points, or 0.8%, to 1,700.34 and the Standard & Poor’s 500 index advanced 6.48 points, or 0.7%, to 990.51.
The Dow was trading very close to its summer high of 9,323.02, the level at which it closed on June 17. The Nasdaq and S&P; 500 also were trading near their summer highs -- 1,754.82 and 1,011.66, respectively.
Advancers outnumbered decliners by about 5 to 3 on the NYSE and Nasdaq. Trading was weak.
Investors spent much of the day sifting through a series of economic reports.
The government reported that the number of Americans filing first-time claims for unemployment benefits edged up slightly last week, rising 2,000 to 398,000. But the number held below 400,000 for the fourth week, which economists say indicates some net job creation.
A separate report showed the U.S. trade gap at a smaller-than-expected $39.5 billion in June, down from $41.5 billion in May, reflecting the biggest surge in exports in three years.
A third government report showed the overall producer price index, a gauge of inflation at the wholesale price level, crept up 0.1% in July, helping keep deflation fears at bay without sparking inflation concerns.
“The economic numbers came out and they were a little bit better than expected,” said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access. “I think that set the tone.”
Bond yields seesawed during the day as traders assessed the economic reports. At the close of regular trading, the yield on the benchmark 10-year Treasury note was almost unchanged from Wednesday’s close of 4.56%. Yields dropped after the power blackout as investors sought the safety of government debt, but soon rebounded.
In other highlights:
* AnnTaylor added 65 cents to $33.65. The New York-based clothing retailer forecast profit for the third quarter would come in ahead of estimates.
* Target dropped $2.24 to $37.70 on second-quarter earnings that fell short of forecasts.
* McDonald’s dragged on the blue-chip gauge with a loss of 22 cents to $22.95. Wachovia Securities cut the fast-food company to “market perform” from “outperform,” saying the shares are “near fully valued.”
* Diversified manufacturer 3M added more pressure to the Dow, skidding $2.36 to $142.14. Smith Barney cut its rating on 3M to “in line” from “outperform” to “reflect its recent strong upward move.”
