Stocks rallied for a second day Thursday as traders found cause for optimism and technology stocks blazed the trail.
The tech-heavy Nasdaq outperformed both the Dow Jones Industrial Average and the S&P 500., jumping 1.5 percent to close at 2533.73. The Dow gained 0.7 percent to close at 12992.66.
The S&P rose 1.1 percent to close at 1423.57, only the third time the index has closed above 1418 this year.
Both the Nasdaq and S&P finished at four-year highs.
The CBOE Volatility Index, or VIX, again declined, logging its 11th straight close below 20. That's the lowest this gauge has been since October, when the market was at its recent highs. Still, volume levels remained low.
"We’re stuck in a trading range –- we’re right at the 200-day moving average on the S&P," Andrew Kanaly, of Kanaly Trust Co., told CNBC. "It has to make a significant move above this before you’re really going to see some confidence" in the market, Kanaly said.
"We’re still waiting for some really strong earings confirmation to move this market higher."
Barry Armstrong, a financial planner at Securities America Advisors in Boston, said he’s moving more of his clients’ money into stocks and other investments such as REITS for one very simple reason: “You can’t make any money in cash right now.”
He’s not jumping on the financials bandwagon, instead favoring technology and retail. Armstrong notes that U.S. personal-computer growth is 3 percent, but world-wide it’s 15 percent. He thinks companies like Hewlett-Packard and Dell are undervalued.
“I am cutting back on foreign stocks,” Armstrong said. “I don’t think the dollar is going to get any weaker.”
The top gainers on the Dow Jones Industrial Average were General Motors , Intel, JPMorgan and and HP.
General Electric and Wal-Mart were the biggest decliners.
Microsoft jumped 1.7 percent as traders cheered news that billionaire investor Carl Icahn has decided tomove ahead with a proxy fight for Yahoo. Icahn, who has amassed a large stake in the Internet company, has lined up at least 12 potential board candidates and the deadline for nominating a dissident slate is today. Yahoo shares rose 2.3 percent.
HPshares rebounded for a second day, climbing 2.4 percent, after a two-day pounding following news of its plan to acquire IT-services firm EDS .
HP was expected to report earnings after the closing bell but the report was postponed until next Tuesday. EDS shares finished flat.
CNET shares soared 43 percent after CBS announcedplans to buy CNET for $11.50 per share, or $1.8 billion. CBS Chief Executive Les Moonves announced the deal, which would catapult the broadcast and media giant to one of the top 10 Internet companies, about two hours before trading began. The price tag amounts to a 41 percent premium on CNET's Wednesday closing price of $7.95. CBS shares fell 2.4 percent.
GMjumped 5.2 percent after the auto maker reached a tentative agreement with a local unionthat could end a monthlong strike at a Michigan plant that makes some of GM's hottest-selling vehicles. The agreement gave investors hope that GM may finally be coming to terms with the UAW. Another strike is still going on in Kansas and one scheduled to start this week in Ohio was canceled.
GE shed 0.4 percent after the company announced plans to sell its appliances unit, which could fetch up to $8 billion, the Wall StreetJournal reported. (GE is the parent company of CNBC and this Web site.)
Crude oil pulled back from its recent high near $127 a barrel after the Senate passed a bill that would close the so-called Enron loophole and allow for greater oversight of energy trading. Crude settled at $124.12 a barrel on the New York Mercantile Exchange after swinging between $120 and $127 in intraday trading.
Oil's retreat boosted optimism for the cash-strapped consumer and the stores where they might be spending their money if they weren't pumping into their homes -- and their gas tanks. Retail stocks advanced, with notable gains in JC Penney, Saks and Tiffany.
JCPenney reported its earnings fell 50 percent but beat expectations. Meanwhile, over on Fifth Avenue, Tiffany raised its quarterly dividend and said it expects first-quarter earnings to beat its prior estimates, sending its shares up more than 4 percent.
Earnings are due out after the bell from Kohl's , and Saks reports next week.
Shares of Blockbuster fell amid profit-taking after the movie-rental chain reported a profit of 20 cents per share, surpassing expectations by 5 cents.
United Airlines and Continental Airlines are in talks to form an alliance that would provide benefits without the carriers having to go through a merger, which Continental rejected last month, according to a person close to the talks.
Blackstone rebounded 5.3 percent after the private-equity and real-estate firm reported it swung to a loss of $93.6 million, or 6 cents a share, compared with a profit of $957.8 million, or 75 cents a share a year earlier.
Among today's economic news, the Philadelphia Federal Reserve reported its May reading of regional manufacturing activity came in at minus 15.6, better than expected. The New York Fed reported its Empire State manufacturing index slipped dropping to minus 3.23in May, worse than expected. Both the Philadelphia and New York readings are closely watched for insight ahead of the national report on manufacturing from the Institute for Supply Management, due out June 2.
Industrial production fell 0.7 percent in April, more than double of what was expected, while capacity utilization dropped to 79.7, the lowest reading since September 2005. Jobless claims rose 6,000, slightly more than expected, last week; the four-week moving average, however, fell to 365,750 from 366,750.
Fed Chairman Ben Bernanke said turmoil in financial markets underscores the need for "generous" capital cushions as big banks. he also said regulators were pushing for more transparency at financial institutions, in a speech delivered at a Chicago banking conference.
Still to Come:
FRIDAY: Housing starts; consumer sentiment
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