Stocks Overcome Early Losses
A late rally lifted the stock market into positive territory Wednesday as some investors appeared to focus more on an upbeat business outlook from Intel than on news of another surge in the U.S. trade deficit.
The dollar took a drubbing on the trade report, but Treasury bond yields were little changed.
On Wall Street, major market indexes fell in the morning, extending Tuesday’s slide. The market firmed by midday, then saw a burst of buying in the final 30 minutes.
The Dow Jones industrial average ended with a gain of 61.56 points, or 0.6%, at 10,617.78, continuing the back-and-forth pattern of recent days.
The Standard & Poor’s 500 index was up 4.71 points, or 0.4%, to 1,187.70, and the technology-dominated Nasdaq composite added 12.91 points, or 0.6%, to 2,092.53.
Winners topped losers by 4 to 3 on the New York Stock Exchange and by a narrower margin on Nasdaq.
Stocks had ended broadly lower Tuesday after disappointing earnings reports or forecasts from Alcoa, Advanced Micro Devices and Genentech.
But after regular trading ended Tuesday, chip giant Intel issued its fourth-quarter earnings report and sounded optimistic for 2005, saying it ended last year enjoying “robust demand.”
That didn’t help stocks early in the session Wednesday, but by late in the day chip-related shares were pulling the rest of the market higher.
“The market’s generally just a bit worried about earnings season, but I would look more at Intel’s news,” Jessica Caie, a money manager at Cohen, Klingenstein & Marks in New York, told Bloomberg News. Intel’s forecast is “indicative of other technology companies and of demand.”
Intel gained 62 cents, or 2.8%, to $23.16; the so-called SOX index of major chip-related shares rose 1.4%.
The government’s report on the November trade deficit held Wall Street back in early trading, analysts said. The report showed the deficit at a record $60.3 billion in November.
The dollar, which had been rebounding against the euro and other currencies since the start of the year, fell sharply on the trade news. A lower dollar may be needed to chip away at the trade deficit by reducing the price of U.S. exports and by raising import prices, analysts say.
“As long as the trade deficit keeps growing ... the dollar should remain under pressure,” said Michael Goosay, a money manager at Prudential Investments in Newark, N.J.
The euro jumped to $1.327 from $1.312 on Tuesday. The dollar fell to 102.35 yen from 103.25.
The greenback’s losses deepened after Treasury Secretary John W. Snow, in an interview, urged Japan and Europe to boost their economies to help shrink the trade gap -- a sign the U.S. may resist pressure to halt the dollar’s slide, analysts said.
The dollar’s woes in the past have caused jitters in the bond market because a weakening currency devalues foreigners’ extensive holdings of Treasury bonds. But yields were mostly flat Wednesday. The yield on the 10-year T-note slipped to 4.23% from 4.24% on Tuesday.
The Treasury auctioned $15 billion in new five-year notes at a yield of 3.73%. Traders said the auction results weren’t a big surprise, even though indirect bidders -- a class of investors that includes foreign central banks -- bought 39.8% of the notes, down from 65.8% at the last five-year note sale Dec. 8.
Among the day’s market highlights:
* Energy stocks rallied as near-term crude oil futures in New York rose 69 cents to $46.37 a barrel, the highest since Nov. 30. Exxon Mobil was up 74 cents to $50.59, Encana jumped $1.82 to $57.30 and Kerr McGee gained $1.43 to $58.19.
* Semiconductor sector stocks rising with Intel included KLA Tencor, up $2.03 to $44.45; QLogic, up 74 cents to $37.15; and National Semiconductor, up 46 cents to $16.85.
* Hospital operator HCA surged $4.02 to $43.70 after raising its profit forecast for the fourth quarter and reiterating its forecast for 2005.
* Rockwell Collins led the defense sector higher after the company, which makes cockpit instruments for airplanes, raised its fiscal 2005 profit forecast. Rockwell gained $2.26 to $39.75.
But Costa Mesa-based ceramic armor maker Ceradyne tumbled $4.84 to $47.63, continuing its recent pullback after soaring 152% last year.
* Genzyme jumped $2.85 to $59.91. The biotechnology firm said that 2005 profit, excluding some costs, could be as high as $2.16 a share, compared with analysts’ average estimate of $2.09.
* Beckman Coulter added 39 cents to a record $68.50. Banc of America Securities upgraded the Fullerton-based maker of genetics analysis kits to “buy,” citing product launches expected in 2005.
* On the downside, United Parcel Service plunged $6.12 to $77.18 after lowering its fourth-quarter earnings forecast, citing higher costs and an unexpected slowdown in post-Christmas package volume.
Rival FedEx eased 94 cents to $94.47 after reiterating its outlook for the fourth quarter.
