Stocks Climb in Light Trading
Stocks rose modestly for a second straight session Thursday as unemployment claims fell unexpectedly and consumer spending grew, if somewhat tepidly, without triggering inflation.
The Labor Department reported that first-time jobless claims fell to a better-than-expected 318,000 last week, down by 13,000 from the previous week. And although the Commerce Department reported a modest 0.3% rise in both personal income and consumer spending last month, the report also pointed to falling inflation risks.
Disappointing earnings from Micron Technology threatened to pressure technology stocks, which have been battered this month as investors have moved to less risky, large-cap stocks. But other tech stocks made gains, led by strong earnings from Research in Motion.
Light volume, however -- blamed on the upcoming holidays and New York’s transit strike -- meant little interest in bidding stocks much higher, analysts said.
“Right now, there’s just a lack of solid trading volume out there, so we’re struggling to move higher based on the good news we have,” said Peter Cardillo, chief strategist and senior vice president at S.W. Bach & Co. “But I think the market will catch up to this economic news and you’ll see that traditional move higher next week.”
The Dow Jones industrial average rose 55.71 points, or 0.5%, to 10,889.44.
Broader stock indicators also rose. The Standard & Poor’s 500 index added 5.33 points, or 0.4%, to 1,268.12, and the Nasdaq composite index gained 14.83 points, or 0.7%, to 2,246.49.
The Commerce Department report eased concerns about inflation, sending yields on 10-year U.S. Treasury notes sharply lower, to 4.43% from 4.49% on Wednesday. Bond yields fall as their prices rise.
“Better-than-expected inflation is making traders feel better” about buying bonds, said Rick Klingman, head of U.S. Treasury trading at ABN Amro Inc. in New York.
Crude oil futures fell 28 cents to $58.28 a barrel in New York trading, and gold futures soared $9.70 to $502.70 an ounce.
Investors also were encouraged by the latest index of leading economic indicators from the Conference Board. The index rose 0.5% in November as unemployment claims dropped and energy prices eased.
Still, investors seemed uninterested in bidding stocks strongly higher. With energy prices still at historic highs for this time of year, and uncertainty over the Federal Reserve’s interest rate policy once Chairman Alan Greenspan retires Jan. 31, there’s little impetus to make a major bet.
“Technically, the market still looks pretty good despite the light volume we’ve seen this week,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. “But we’re probably not ready to break out above this level until we get a better read on when the Fed is going to be finished up raising rates.”
* Micron, a maker of semiconductor products, dropped 50 cents to $13.64 after reporting a 60% drop in first-quarter profit because of falling demand and plunging prices for its computer memory chips. The company missed Wall Street profit forecasts by 2 cents a share.
Other chip makers were unaffected, with Dow component Intel up 9 cents to $25.97 and Advanced Micro Devices adding 68 cents to $30.02.
* Humana rose $6.97 to $55.29 for its biggest rally in five years. The company said it expected the number of people enrolled in its Medicare plans to surpass 1.7 million Jan. 1, compared with 503,000 at the end of September.
* Barrick raised its bid for Placer Dome by 9.8% to $22.50 a share, and the two firms agreed to combine. The acquisition would be the biggest ever in the gold industry, vaulting Barrick ahead of Newmont Mining.
Barrick fell 10 cents to $27.12 and Placer Dome dropped 31 cents to $22.34. Newmont gained $1.51 to $51.96.
* Research in Motion jumped $6.54 to $68.30. The maker of the BlackBerry e-mail pager said after the bell Wednesday that third-quarter profit excluding some items was 71 cents a share, topping the 63-cent estimate by JPMorgan analyst Paul Coster.
* Red Hat climbed $1.24 to $27.80. The world’s biggest distributor of Linux computer software said third-quarter per- share net income rose to 12 cents on revenue of $73.1 million. That surpassed analysts’ estimates for earnings of 9 cents a share on $71.1 million in sales.
* Caterpillar rose $1.37 to $58.45 for the best performance in the Dow average, on a positive report from Credit Suisse First Boston analyst John McGinty.
