The Dow’s three-day slump came to an end on Thursday as a pair of economic gauges climbed to their highest level since the height of the credit crisis, raising hopes of an economic recovery.
However, tech stocks tumbled amid pre-earnings jitters, sending the Nasdaq Composite to its third down day in the past four sessions.
Today's Markets
The Dow Jones Industrial Average rose 58.42 points, or 0.69%, to 8555.60, the Standard & Poor's 500 added 7.66 points, or 0.84%, to 918.37 and the Nasdaq Composite sank 0.34 points, or 0.02%, to 1807.72. The consumer-friendly FOX 50 climbed 3.47 points, or 0.52%, to 676.96.
Stocks climbed out of the doldrums after the Philadelphia Fed's regional manufacturing index unexpectedly jumped to nine-month highs. While the Dow rallied for the first time since Friday, the gains weren't huge and the index recovered just a portion of this week's 300-point decline.
“It continues along the theme over the last several weeks in that the moves aren’t big. Although we’re still in an uptrend, it just seems to be getting tired,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research.
The vast majority of the Dow's 30 members closed in the green, led by banks JPMoragn Chase (JPM) and Bank of America (BAC). The biggest percentage losers on the index included Intel (INTC) and Caterpillar (CAT).
The Nasdaq Composite, which broke a two-day slide on Wednesday, lagged behind the broader markets as some tech stocks like Electronic Arts (ERTS) and Yahoo! (YHOO) slumped ahead of BlackBerry maker Research in Motion's (RIMM) quarterly report.
Financial stocks led the way up for the markets as banks like KeyCorp (KEY) and Wells Fargo (WFC) bounced back after the group sold off Wednesday on a slew of credit ratings downgrades.
Stocks turned solidly positive after the Philadelphia Fed's regional manufacturing survey surged in June to a -2.2 reading, up sharply from -22.6 in May and well above the -18 reading economists had expected. It was the highest level for the survey since September, showing a big improvement in sentiment among manufacturers.
At the same time, the Conference Board's leading economic indicators index jumped by 1.2 points in May -- its largest one-month jump since March 2004. The index climbed to 100.2, the highest level since September.
“These reports today are seemingly indicating a bottoming process as far as the economy is concerned,” said Sparks.
Also, the Labor Department’s new unemployment report revealed continuing jobless claims plunged by 148,000 to 6.69 million -- the first drop since early January and the largest one-week drop since Nov. 2001. The drop in continuing claims, which are filed by those out of work for more than one week, may have less to do with stabilization in the job market and more to do with an exhaustion of benefits, which on average last 26 weeks.
“The decline will be noted as being further evidence the current recession is waning, helping to boost equity prices and bond yields,” Dan Greenhaus, equity analyst at Miller Tabak, wrote in a note. “Extracting a one-week decline and making a larger case is premature; one week does not a trend make.”
The government also said initial jobless claims climbed by 3,000 last week to 608,000, more or less in line with expectations.
Meanwhile, the markets continue to closely mirror the price of crude oil, which tends to boost energy stocks as it rises. A day after breaking a three-day slump, crude climbed 34 cents per barrel, or 0.48%, to settle at $71.37.
Corporate Movers
JM Smucker (SJM) easily beat the Street with an adjusted-profit of $1.02 per share as its sales soared 81% to $1.07 billion. The jelly and preserves company also boosted its 2010 profit guidance.
Liz Claiborne (LIZ) lost one-quarter of its market value after the apparel company forecasted a deeper-than-expected loss in the second quarter.
Discover Financial (DFS) reported a second-quarter profit of 43 cents per share even as it increased provisions for loan losses by 91% to $530 million. Analysts had been expected a loss of 29 cents per share.
WebMd (WBMD) announced an all-stock deal to acquire parent company HLTH (HLTH) eight months after the two companies abandoned a merger due to the credit crisis.
Carnival (CCL)beat the Street with a second-quarter profit of 33 cents per share on $2.9 billion in revenue. The cruise operator said booking volumes for the second half are up 26% from a year ago, though ticket prices are substantially lower.
Winnebago (WGO) reported a deeper-than-expected quarterly loss of 29 cents per share as its revenue tumbled by nearly 33%. The mobile home company said its dealer inventory has tumbled by almost 50% from last year.
Jefferies (JEF) said it became U.S. primary dealer on Thursday, joining 16 other financial companies that can do business directly with the Federal Reserve.
Global Markets
European markets shed earlier losses to end mostly higher. In London, the FTSE 100 climbed 0.06% to 4280.86, France's CAC 40 rallied 1.04% to 3194.06 and Germany's DAX rose 0.78% to 4837.48.
In Asia, Japan's Nikkei 225 slumped 1.39% to 9703.72, Hong Kong's Hang Seng lost 1.7% to 17776.66 and China's Shanghai Composite rose 1.56% to 2853.90.
