Economic Reports Boost Stocks
Stocks surged Friday, with the Dow industrials hitting a five-week high, after surprisingly strong economic reports bolstered investors’ confidence that an economic rebound is on its way and traders snapped up shares hit in Thursday’s late-day sell-off.
The market waffled around the unchanged mark in early trading, but staged a late rally. Stocks received a boost by a government report that new orders for manufactured goods shot up in June at the fastest rate in five months. In another report, the government said sales of new homes reached a record pace in June -- surprising Wall Street analysts who were expecting a decline.
“People came in in the morning thinking ‘sell’ and once they looked at the economic data, they realized it was better than expected,” said Adam Tracy, director of listed trading at Thomas Weisel Partners.
Hopes that the U.S. involvement in Iraq soon will wind down also gave the market a boost after the death of former Iraqi leader Saddam Hussein’s sons and the capture of several men suspected of belonging to his bodyguard unit, traders said.
Those factors helped overshadow forecasts from several tech companies, including JDS Uniphase and KLA-Tencor.
The Dow Jones industrial average jumped 172.06 points, or 1.9%, to 9,284.57, its highest close since June 18. The Standard & Poor’s 500 index climbed 17.08 points, or 1.7%, to 998.68 and the technology-laden Nasdaq composite index jumped 29.28 points, or 1.7%, to 1,730.70.
Winners led losers by 2 to 1 on the New York Stock Exchange, but trading was tepid -- typical for a summer Friday. For the week, the Dow rose 1% for its fourth weekly gain in a row.
The Nasdaq composite climbed 1.3% for the week, and the S&P; 500 advanced 0.5%.
The market fell sharply late Thursday on technical selling, and investors took the opportunity Friday to nibble at beaten-down stocks.
“Every time the market backs off, it seems like buyers come back in on the dip,” said James Volk, managing director of equity trading D.A. Davidson & Co. “It’s obvious people are looking for excuses to buy stocks.”
JDS shares sank a day after it reported a much narrower fourth-quarter loss but forecast falling sales amid continued weak demand in the communications industry. Its shares sank 30 cents to $2.85.
KLA-Tencor reported lower fiscal fourth-quarter net income and revenue and projected higher revenue in the current quarter, but its chief financial officer said he was cautious about the timing of a recovery. The company’s shares rebounded from an initial decline and rose 31 cents to $52.44.
In other highlights:
* Pfizer, the world’s largest drug maker, reported a net loss for the second quarter versus a profit last year as costs from its acquisition in April of Pharmacia weighed on results. Pfizer shares still managed to climb 49 cents to $33.04.
* Shares of California Pizza Kitchen plunged $3.15, or 16%, to $17.01. After the market closed Thursday, the L.A.-based restaurant operator said its chief executive had resigned.
* Cummins surged $7.22, or 19%, to $45.16 after it reported an unexpected rise in its quarterly earnings on a rebound in revenue at its diesel engine business.
* Gold inched up 50 cents to $362.70 an ounce in New York trading, capping its biggest weekly gain in 17 months. Gold climbed 4.5% this week as the dollar slumped against the euro, making the dollar-denominated metal cheaper for European buyers and spurring demand.
* The Canadian dollar surged against the greenback, closing at 72.5 cents as it notched its biggest three-day gain against the U.S. dollar in 15 years.
Market Roundup, C4-5
