Stocks remained afloat Thursday as the market digested a mixed bag of economic data and a congressional hearing on the Bear Stearns bailout, and braced for Friday's jobs report.
The S&P 500 indexes for materials and telecoms were the biggest gainers among 10 key S&P sector indexes, finishing up 1.8 percent and 1 percent, respectively.
Trading may not have seemed all that exciting, with barely higher readings on all three major indexes, but analysts noted that it's psychologically important that stocks have held gains after Tuesday's spectacular rally, instead of selling the rally.
Merrill Lynch offered the market some reassurance late in the session after Merrill CEO John Thain told Japan's Nikkei News newspaper that the firm doesn't need to raise more capital.
MF Global shot up nearly 15 percent after the largest futures brokerage said it's seeking financial alternatives but isn't considering an outright sale of the firm, the Wall Street Journal reported.
The market got some additional fortitude from Senate testimony by Federal Reserve Chairman Ben Bernanke, during a hearing on the bailout of Bear Stearns. Bernanke told lawmakers that the central bank expects to recover most, if not all, of the $29 billion in loans it's providing to keep Bear Stearns from collapse.
The chief executives of both Bear Stearnsand JP Morgan Chase said during the hearings that Bear Stearns would not have survived without the Fed's helpand that failing to rescue it would've had disastrous implications for the financial markets and the economy. Shares of Bear Stearns fell 1.3 percent while JPMorgan finished flat.
Economic data came in mixed -- weekly jobless claims rose more than expected to 407,000, the highest reading since September 2005, though the Labor Department cautioned an early Easter may have skewed the numbers. The ISM's monthly reading on the services sector was better-than-expected at 49.6 for March.
An index of CEO confidence in the U.S. economy dropped to a record low in March. "They're basically saying, this is as bad as it gets right now," Edward Kopko, the publisher of Chief Executive magazine said.
Still, "I think that the desire to sell is coming off," Thomas J. Lee, equities analyst at JPMorgan, told AP. The fact that the market has not been shaken by recent disappointing economic data "tells me that the recession is largely discounted."
The weak jobless-claims report comes a day after ADP Employer Services reported that 8,000 jobs were added to private-sector payrollsin March. On Friday, the Labor Department will issue its March employment report. The consensus is for nonfarm payrolls to have dropped by 60,000, following a 63,000 decline in February, and for the unemployment rate to tick up to 5 percent from 4.8 percent.
Fed Polices Brokerage Firms
The Fed has stationed itself inside brokerage firmsincluding Goldman Sachs and Bear Stearns -- something it hasn't done in a decade -- to monitor their financial condition, the Wall Street Journal reported. The move is tied to the Fed's decision to lend money to Wall Street.
Among other firms that will get in-house Fed monitors are: Morgan Stanley , Lehman Brothers , Merrill Lynch and JPMorgan Chase.
Judicial attempts to sort out the subprime mess continue, with legal battles still making headlines.
A federal judge has granted the U.S. Department of Justice wide authority to probe whether Countrywide Financial abused the bankruptcy process, rejecting the mortgage lender's claim that the ruling could cause havoc for the lending industry.
In Europe, London newspaperThe Times reported that rogue trader Jerome Kerviel had launched court proceedings against Societe Generale to contest his sacking for gross misconduct after he exceeded his trading limit, causing the bank 4.9 billion euros ($7.5 billion) in losses in January.
One of Kerviel's lawyers denied Kerviel had filed suit but declined to comment on the possibility that he would.
RIM, Apple Rally
Research In Motion jumped nearly 6 percent after the BlackBerry maker late Wednesday reported that it earned 72 cents a share in the fiscal first quarter, topping the high end of its range -- and analysts' forecasts -- by two cents. The company added 2.18 million new subscribers, also the top end of analysts' range. The company projected earnings of 82 to 86 cents a share for the fiscal first quarter, well above analysts' forecast of 76 cents a share.
Apple advanced 2.8 percent. The company said Thursday that its iTunes online music store has eclipsed Wal-Mart as the largest music music retailer in the U.S., citing data from research group NPD.
Piper Jaffray online media analyst Gene Munster explained to the "Fast Money" crew on Wednesday night what the whole iPhone shortage buzz was about: a new iPhone. Munster said a new model that uses 3G technology -- crucial for global roaming -- could be out as early as the end of the month, according to a component supplier.
Meanwhile, Garmin shares skidded 6.4 percent after the navigational-device maker issued a weaker-than-expected revenue forecast. Garmin said its first-quarter sales would be about 40 to 50 percent below the fourth quarter, which would put the range between $615 million and $738 million. Analysts expect revenue of $731.2 million, according to a Reuters survey.
Among other tech decliners was industry bellwether Cisco Systems, which fell nearly 3 percent, after UBS downgraded its rating on the stock to "neutral from "buy," citing concerns about slowing orders.
Shares of Micron Technology rebounded more than 6 percent. The largest U.S. maker of flash-memory chips late Wednesday reported its loss widened in the fiscal second quarter as revenue was hurt by the persistent slump in prices of memory chips, which are used in gadgets such as cellphones, digital cameras and music players.
As tech firms brace for slower U.S. spending, news emerged of more layoffs.
Michael Dell said Dell Computer plans to cut more jobs than the 8,800 it had previously announced and that it has already eliminated 5,500 positions.
"We are not satisfied with the current state of affairs and are on a mission to fix it," Dell said. "Every area of the company is being pursued" for cost cuts.
And Google is said to be planning to lay off 20 percent of DoubleClick's global workforce, the New York Times reported.
Schering-Plough rallied 11 percent as Wall Street cheered the drug developer's plan to cut jobs in the wake of news that the company's joint cholesterol drug with Merck , Vytorin, is no more effective than cheaper statins. Still, Schering shares are off about 25 percent for the week.
Crude oil spiked in afternoon trading but settled down $1 at $103.83 on the New York Mercantile Exchange amid concerns about a consumer slowdown.
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