Tech Stocks Gain; Exxon Slides

The Dow industrials tilted higher Thursday after a better-than-expected reading on U.S. manufacturing activity. The Nasdaq moved solidly higher as big-name tech stocks continued to draw interest.

"The economic numbers haven't looked that bad to tell you the truth," Alan Lancz, president of Alan B. Lancz & Associates in Toledo, told Reuters. "There are a lot of shorts out there who were expecting disappointing numbers  ... This is putting pressure on the shorts and plus, there's a lot of cash out there."

The Dow had initially opened lower as a rise in jobless claims rattled a few cages ahead of tomorrow's jobs report and ExxonMobil's $10.9 billion quarterly profit was -- wait for it -- a disappointment.

Exxon Mobil , the biggest drag on the Dow, reported its net income rose 17 percent to $10.9 billion, or $2.03 per share, up from $9.3 billion, or $1.62 per share, a year ago. But analysts had expected that, given record oil prices, the company would surpass its own record of an $11.7 billion profit earned in the fourth quarter of 2007. The culprit, it seems, was margins at the company's refining operations. Record prices of refined products such as gasoline, while a menace to consumers, failed to keep pace with the rapid increase in crude prices.

Crude oil dropped below $111 a barrel, while gold fell to a multi-month low around $850 a troy ounce as the dollar hit a one-month high against the euro.

After the Federal Reserve offered little indication about whether it is done cutting rates on Wednesday, the market turned to the latest economic numbers for direction on the economy.

The Institute for Supply Management said its index of U.S. manufacturing activity held steady at 48.6 in April, though it remained below 50, which indicates contraction. Prices paid increased. A separate report from the Commerce Department showed construction spending dropped 1.1 percent in March after a 0.4 percent increase in February.

Initial jobless claims rose by 35,000, more than expected, last week and the number of workers remaining on jobless benefits hit a four-year high. However, the four-week moving average of new claims fell to 363,750 from a revised 370,250, the Labor Department reported.

Personal spending in March rose 0.4 percent, twice as much as expected, the Commerce Department reported. Income climbed 0.3 percent, just below the 0.4 percent expected. The Fed's favorite inflation gauge, personal consumption expenditures excluding food and energy, rose 0.2 percent, better than the 0.1 percent expected.

Shares of Adobe Systems rose after the maker of Photoshop and Flash software maker said it expects quarterly revenue to come at the high end of its expected range and backed its projection of 13 percent revenue growth for the full year ahead of its annual meeting later today.

Among other notable gainers in tech land were Intel , Google , Apple , Yahoo   and Research In Motion .

Meanwhile, Microsoft's board met, but failed to come to a consensus about what to do concerning its bid for Yahoo. The software giant could make a hostile bid, sweeten its offer or just walk away altogether, the Wall Street Journal reported.

Home Depot was the biggest gainer on the Dow after the home-improvement retailer announced plans to close 15 underperforming U.S. stores and put a lid on opening future stores for a while. Home Depot said it expects a charge of about $586 million related to this move. Even excluding this charge, Home Depot expects a 24-percent drop in earnings for the year.

Airline stocks continued to benefit from consolidation speculation. Among today's big winners were AMR's American and Continental . For the week, the five airlines at the center of most of the merger speculation are up anywhere from 11 percent (Continental) to 31 percent (Northwest).

Starbucks said after the bell Wednesday that it would likely earn less this year than the year before.

Burger King Holdings , the second largest fast-food chain, posted a gain in quarterly profit that amounted to 30 cents per share, ahead of the analysts estimate of 27 cents a share.