Earnings Report Bumps Up Stocks

Stocks rebounded from early losses Thursday, closing higher as National Semiconductor’s better-than-expected earnings helped soothe investors’ concerns about the employment picture and rising oil prices.

In other markets, the dollar continued its recent rebound, and Treasury bond yields rose after a disappointing sale of long-term notes.

National Semiconductor’s report of a 22% rise in quarterly profit offset poor sales figures from two other computer chip makers and helped pull major stock indexes up for the day.

The Dow Jones industrial average, down more than 75 points early in the session, ended with a gain of 58.59 points, or 0.6%, at 10,552.82.

“You saw the markets just turn right around after National Semi released their figures,” said Keith Keenan, an institutional trader at Wall Street Access. “That helped restore a little optimism in the market, but there’s still a lot to be worried about. This could be pretty short-lived.”

Broader stock indicators also closed higher. The Standard & Poor’s 500 index was up 6.43 points, or 0.5%, to 1,189.24, and the technology-dominated Nasdaq composite inched up 2.90 points, or 0.1%, to 2,129.01, after trading as low as 2,097.

Advancing issues outnumbered decliners by nearly 7 to 6 on the New York Stock Exchange, although losers led on Nasdaq.

Economic reports Thursday had put investors on edge early in the day. The government said new claims for unemployment benefits rose by 8,000 to 357,000 last week, boosting concerns about the job market. Wall Street had expected 335,000 claims.

Investors also were troubled by reports that the Organization of the Petroleum Exporting Countries might cut oil production early in 2005. That helped to lift oil prices for a second straight day. Near-term crude futures in New York gained 59 cents to $42.53 a barrel.

Rising bond yields added to Wall Street’s concerns. A Treasury auction of $9 billion in 10-year notes attracted fewer bids than expected. The notes were sold at a yield of 4.15%. The yield on the existing 10-year T-note jumped to 4.17% from a three-week low of 4.12% on Wednesday.

By contrast, investors put in a flood of orders for five-year T-notes at an auction Wednesday.

On the plus side, the dollar continued to firm. It rose to 104.50 yen from 104.04 on Wednesday and gained against the euro and Canadian dollar.

Among the day’s highlights:

* National Semiconductor rose 79 cents to $16.79 after reporting earnings of $80 million, or 21 cents a share, compared with $66 million, or 17 cents a share, a year earlier.

But Xilinx and Altera, the two biggest makers of programmable microchips, reported larger declines in sales than analysts expected. Xilinx fell $1.01 to $29.72; Altera slid $1.73 to $20.47.

* Luxury-home builder Toll Bros. surged $6.88 to $60.99 after profit soared 93% in the quarter and the company surpassed earnings forecasts by 25 cents a share. Los Angeles-based KB Home notched a $4.27 gain to $96.28 and Hovnanian Enterprises picked up $2.22 to $42.10.

* Procter & Gamble helped to bolster blue chips, rising $1.35 to $56.38 after giving an upbeat business outlook after markets closed Wednesday.

* DreamWorks Animation SKG dropped $2.51 to $37.69. The company reported better-than-expected profit Wednesday but disappointed Wall Street by delaying the release of “Shrek 3” by six months. Pixar Animation Studios, which is also putting off the release of its next movie, fell $1.83 to $84.94.

* Ciena surged 54 cents to $2.88. The phone and cable equipment maker said sales this quarter would beat estimates.