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Stocks Eke Out a Gain; Retailers Advance

Thursday, 22 Apr 2010 | 5:15 PM ET

Stocks pulled off a gain Thursday as comments from a European official offered some relief on the Greece front. Consumer-discretionary stocks were the day's best performer, along with materials and industrials.

Stocks had struggled earlier today amid worries about Greece and some weak corporate outlooks.

But the market turned around in early afternoon trading after Olli Rehn, the European commissioner for economic and monetary affairs, said Greece was a unique case and that other countries that have been tossed around as "the next Greece" — Spain, Portugal and Italy — would avoid a debt crisis.

The Dow ended up nearly 10 points, or 0.1 percent, led by Boeing , Travelers and American Express , which reports earnings after the closing bell. Travelers reports Friday morning before the open.

It was the fourth straight up day for the Dow, though yesterday's was also a squeaker. The index is up just a little over 1 percent for the week.

The S&P 500 rose 0.3 percent today and the Nasdaq advanced 0.6 percent.

Volatility eased: The CBOE volatility indexfell back around 16 after being around 18 this morning.

The dollar rose against the euro, ending near its 52-week high after Moody's cut Greece's sovereign rating by a notch and placed the rating on review for a further possible downgrade. Oil pricessettled above $83 a barrel, while gold slippedto nearly $1,142 an ounce.

Some good news on the economic front today: Weekly jobless claims fell by 24,000 last week, and existing-home sales rose by 6.8 percentlast month.

Homebuilder stocks were among the gainers today, along with some retail names and Amazon , which reports after the bell.

Earnings season had been chugging along nicely, with more than 80 percent of the S&P 500 names reporting so far beating expectations.

But there were a few blemishes on the quarter in this latest batch as several companies delivered disappointing outlooks, including eBay , Qualcomm , Abbott Labs and Gilead Sciences.

Just a day after Qualcomm said it was seeing weakness in demand for its cellphone chips, Finnish handset maker Nokia missed its earnings target and lowered its outlook for margins, citing competition from Research In Motion , Apple and others.

And Verizon reported its wireless growth slowed during the quarter a day after AT&T reported that the number of new subscribers with contracts added was nearly half of what it was a year earlier and the lowest since 2004.

So, while Apple seems to be defying the economic slump, reporting blowout earnings and a great outlook, it doesn't seem to be taking the whole sector with it. Telecoms were one of the worst—performing sectors today.

U.S.-traded shares of Nokia got hammered today, falling 13 percent. Qualcomm was down more than 5 percent and Motorola was off more than 3 percent.

Netflix jumped more than 15 percent after the online video-rental company reported upbeat first-quarter results, new subscriber additions and growth in its video-streaming business.

And Sandisk shares continued to soar, up another 12 percent, after the microchip maker reported its quarterly revenue jumped 65 percent and boosted its outlook.

Traders have been cycling into recovery plays like tech and industrials amid some encouraging economic signs, like today's reports on jobless claims and existing-home sales. The day's best-performing sectors included consumer discretionary and industrials.

But investors continued hedge their bets — early in the day, consumer staples and health care saw some action, while techs finished in the middle of the pack.

"The market is tired," said Michael Cohn, chief investment strategist at Atlantic Asset Management. "I'm kind of in a 'sell in May—go away' mode here," he said.

Stock Rally Will Keep Pushing Up
"The market is clearly in an uptrendâ?¦ we don't expect that to change any time soon as long as the trend is to spend in the US as well as by other major central banks worldwide," Aaron Smith from Superfund Financial told CNBC Thursday.

Cohn said he's not taking all of his money off the table, but rather selling the stuff that's done well and "maintaining a position in the defensive group."

“It’s as if the market is going through a little bit of rotation right now,” said Quincy Krosby, market strategist at Prudential Financial. Investors believe that the valuations have gotten ahead of themselves.”

On the consumer front, Pepsi beat earnings expectations but disappointed with revenue, while Starbucks beat and raised its outlook, saying more customers are coming to its coffee shops — and they're spending more.

Baxter International shares declined almost 15 percent after the pharma firm cut its outlook for the year, due to weak demand for its plasma-based medical products. Baxter was the biggest laggard on the S&P 500.

The Dow has registered gains in nine of the past ten trading days, though more than a few have been squeakers, but some pros say the overall trend is still upward.

"The market is clearly in an up trend… we don't expect that to change any time soon as long as the trend is to spend in the U.S. as well as by other major central banks worldwide," Aaron Smith from Superfund Financial told CNBC Thursday.

"Anyone who has any sense from a technical standpoint would be long," Smith added.

Some big earnings to note after the bell today, including Amazon , American Express , and Microsoft .

Bank stocks finished mixed as President Obama called on Wall Street to abandon its opposition to financial reforms but didn't fire any unexpected shots. The Senate could begin debating financial reform next week.

PNC Financial was among the gainers in the financial sector, jumping 5 percent after the bank reported better-than-expected quarterly results.

Huntington also rose after at least four brokerages raised their price targets on the regional bank.

Meanwhile, Moody's has cut its credit rating on auto makerToyota to its lowest level ever, saying problems stemming from its recalls could pressure profits through 2012.

Qwest Communications and CenturyTel are in advanced merger talks and a deal could come in the next two days. It would be one of the biggest telecom deals in recent years.

Also on the M&A front, CyberSource shares rose after the electronic payment firm agreed to be boughtby Visa on Wednesday for around $2 billion in cash. The deal will allow Visa to improve its online transaction services and help fight fraud.

Not a good day for IPOs: There were five that priced last night, all at the low end or below the expected range, including Codexis, DynaVox, Alimera, Global Geophysical, and SPS Commerce.

Volume was decent, with about 1.29 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 7 to 5.

Still to Come:

THURSDAY: Earnings from Amazon.com, American Express, Microsoft & Capital One after the bell
FRIDAY: Durable-goods orders; new-home sales; Earnings from Travelers, Honeywell, Schlumberger & Xerox

Send comments to cindy.perman@nbcuni.com.

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