Stocks rebound on Wall Street
Stocks rebounded from early losses in the United States today, closing higher as National Semiconductor Corp’s better-than-expected earnings soothed investors’ concerns over higher unemployment and rising oil prices.
National Semiconductor’s 22% rise in quarterly profits also offset poor sales figures from two other semiconductor makers and helped tech shares post small gains.
The markets were heading substantially lower in early trading, due to the troubling economic data, before the chip maker released its earnings report.
“You saw the markets just turn right around after National Semi released their figures,” said Keith Keenan, vice president of institutional trading 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.”
The Dow Jones industrial average rose 58.59, or 0.56%, to 10,552.82. The Dow had been down more than 75 points earlier in the session.
Broader stock indicators were modestly higher. The Standard & Poor’s 500 index was up 6.43, or 0.54%, at 1,189.24, while the Nasdaq composite index gained 2.90, or 0.14%, to 2,129.01.
The surprise climb in unemployment claims – which rose by 8,000 to 357,000 last week – added to lingering concerns about the job market from Friday’s disappointing job creation report. Wall Street had expected the Labor Department to report just 335,000 new claims.
Investors remained cautious as crude oil futures rose for the second straight day, pushing past the 42dollars-per-barrel mark. The market fretted about whether a small build in U.S. heating oil stocks was enough to last the winter, and pondered word from Kuwait’s oil minister Sheik Ahmad Fahad Al-Ahmad Al Sabah that OPEC may cut production early in 2005.
A barrel of light crude for January delivery settled at 42.53dollars, up 59 cents, on the New York Mercantile Exchange.
“There isn’t any conviction out there right now on the part of investors,” said Lincoln Anderson, chief investment officer at LPL Financial Services in Boston. ”They don’t have the conviction that profits have staying power into 2005. They don’t have much conviction that the economy’s going to grow at a decent clip. There’s a lot of undue pessimism out there.”
The good news from National Semiconductor helped the technology-heavy Nasdaq move into positive territory. Tech stocks started the session lower after Xilinx Inc. and Altera Corp., the two biggest makers of programmable microchips, each reported a larger drop in sales than was previously expected. National Semiconductor gained 79 cents to 16.79dollars, while Xilinx fell 1.01dollars to 29.72dollars, and Altera tumbled 1.73dollars to 20.47dollars.
National Semiconductor’s earnings failed to revive the rest of the chip sector. Intel Corp. lost 25 cents to 22.76dollars and rival Advanced Micro Devices Inc. was down 80 cents at 22.10dollars.
Telecommunications equipment maker Ciena Corp. increased its sales forecast for the current quarter by 20% and posted a lower-than-expected loss for the past quarter. Ciena climbed 54 cents, or 23.08%, to 2.88dollars.
Dow Jones industrials component McDonald’s Corp. gained 28 cents to 31.78dollars. It reported sales at stores open at least a year rose 4.2% in November, with US stores making the most gains.
DreamWorks Animation SKG Inc., in its first quarterly earnings report since going public, beat Wall Street profit forecasts by a penny per share, but disappointed Wall Street by pushing back the release of “Shrek 3” by six months, to May 2007. DreamWorks Animation dropped 2.51dollars to 37.69dollars.
Advancing issues outnumbered decliners by nearly 7 to 6 on the New York Stock Exchange, where volume came to 1.63 billion shares, compared with 1.53 billion on Wednesday.
The Russell 2000 index of smaller companies was down 1.96, or 0.31%, at 629.19.
