Stocks climb, but wariness remains
Stocks lurched higher after a back-and-forth session Thursday as investors apparently set aside some interest rate concerns and took a dose of upbeat economic data at face value.
The Federal Reserve Bank of Philadelphia’s index of regional manufacturing activity jumped to 18 from 4.2 in May.
But the report failed to unnerve investors who had been wary that any sign of economic strength might lead Fed policymakers to raise interest rates when they meet next week.
Investors also pushed away their worries about long-term interest rates, even as the yield on the benchmark 10-year Treasury rose to 5.19% from 5.15% late Wednesday.
The Dow Jones industrial average rose 56.42 points, or 0.4%, to 13,545.84 after dropping 146 points Wednesday.
The Standard & Poor’s 500 index rose 9.35 points, or 0.6%, to 1,522.19, and the Nasdaq composite index advanced 17 points, or 0.7%, to 2,616.96.
The Russell 2,000 index of smaller companies rose 3.63 points, or 0.4%, to 839.81.
Advancing issues outpaced decliners by about 9 to 7 on the New York Stock Exchange.
Oil prices, which had climbed in recent sessions amid concerns about a general strike in Nigeria, Africa’s largest oil producer, reversed course Thursday. Crude futures fell 21 cents to $68.65 a barrel on the New York Mercantile Exchange after nearing $70 early in the day.
The dollar rose against the yen and the euro, while gold prices fell.
Technical problems forced the American Stock Exchange to halt the trading of stocks and exchange-traded funds for about 2 1/2 hours late in the session.
Among other economic data, the Labor Department said the number of workers seeking jobless benefits rose by 10,000 last week to a two-month high, marking the third straight weekly gain. Although the increase wasn’t large, the movement could suggest that unemployment isn’t quite as low as it had been. Wall Street might regard the report as good news, however, because overall unemployment remains quite low and wage inflation could result if employers have to fight for workers.
The Conference Board’s May index of leading economic indicators predicted that the U.S. economy would expand modestly in the coming months.
The report came during a quiet week for economic news and corporate earnings. Investors are hoping that a parade of strong earnings reports might continue and provide adequate fodder to send stocks higher after a largely uninterrupted 11-month rally.
“The market is kind of in a wait-and-see mode,” said J. Bryant Evans, a portfolio manager at Cozad Asset Management. “When we hear from the Fed again the market will probably move one way or the other.”
In other market highlights:
* An index of financial shares in the S&P; 500 gained 0.2%, rebounding from Wednesday’s 1.7% slide. Merrill Lynch reportedly decided to back away from a threat to dump about $850 million of securities it seized from Bear Stearns’ hedge funds as collateral for loans. The decision eased concern that the securities auction would lower the value of similar assets held by banks, hedge funds and other investors.
* Cheesecake Factory dropped $1.90, or 7.1%, to $24.85. At least three analysts lowered their ratings on the Calabasas Hills-based restaurant firm after it forecast quarterly sales growth below their estimates.
* Coffee chain Starbucks fell $1.06, or 3.9%, to $26.26 after warning that reaching the top end of its fiscal 2007 profit forecast could prove challenging, in part because of high dairy costs.
* H&R; Block fell 74 cents, or 3.2%, to $22.04 after reporting that it swung to a fourth-quarter loss amid continuing troubles in its mortgage-lending arm. The unit’s problems outweighed higher revenue in Block’s tax and financial services businesses.
* U.S.-traded shares of Italian eyewear maker Luxottica Group rose $3.18, or 9.1%, to $38.02 after the company agreed to acquire rival Oakley for $2.1 billion. Oakley, based in Foothill Ranch, jumped $3.22, or 13%, to $28.45.
* Advanced Micro Devices climbed $1.08, or 7.9%, to $14.72 after an analyst raised his rating on the stock, suggesting the chip maker had taken market share from rival Intel, whose shares rose 35 cents, or 1.5%, to $24.29.
Nvidia, a maker of graphics chips, climbed $3.12, or 7.8%, to a record $42.98. Lehman Bros. upgraded the stock to “overweight” from “equal weight,” citing improved demand for personal computers and the company’s new Tesla chips.
* Andersons, an ethanol and grain producer, jumped $5.10, or 13%, to $45.50 after the company raised its full-year profit forecast following a strong second-quarter performance from its agricultural businesses. The company has begun producing ethanol from a second plant and has seen better-than-expected margins.
* Overseas, key stock indexes rose 0.2% in Japan and fell 1.6% in Germany, 1% in France and 0.8% in Britain.
