Stocks Turn Positive, Led by Tech; Disney Falls
Stocks turned positive Thursday as technology and consumer stocks gained, and banks fell, and investors absorbed another batch of mixed economic data.
The Dow Jones Industrial Average rose more than 10 points, after dropping more than 90 points earlier. Boeing, Walt Disney and JPMorgan were the top laggards, while Alcoa and Hewlett-Packard rose.
The S&P 500 and the Nasdaqrose. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 23.
Financials, energy and indutrials sectors slumped, while technology and consumer discretionary sectors rose.
Existing home sales rose 7.6 percent in August to an annual rate of 4.13 million units, according to the National Association of Realtors. The rise was less than the 8.4 percent boost expected by analysts polled by Reuters. Leading indicators rose 0.3 percentversus an increase of 0.1 percent in July, more than expected.
Weekly claims for unemployment benefits rose by 12,000 to 465,000last week, up from a revised 453,000. The rise in claims ended two weeks of declines. Most economists expected claims would hold steady at about 450,000.
"The jobless claims data is looking to dance, once again, with 500,000 and this has tremendous negative implications on the equity market," said Todd M. Schoenberger, managing director of LandColt Trading.
"Realizing that the final Q2 GDP print is out next Thursday, which is expected to be weaker than before, traders want to know where the top-line revenues are going to come from for Fortune 500 companies," Schoenberger said. "The returns we received so far this month may quickly evaporate by the weekend."
The market has racked up impressive gains for September, but the rally began to stallthis week after the Federal Reserve indicated on Tuesday it was prepared to support the U.S. economy if needed. The Fed also raised concerns about low inflation.
The jump in the technology sector was led by Red Hat, which jumped more than 10 percent after the company reported lower second-quarter profit, but beat Wall Street forecasts on a sharp increase in sales of its software.
Nvidia also soared after BMO raised the graphics processor designer to "outperform" from "market perform," and boosted its price target to $16 a share from $9. BMO cited improvement in the company's market share and stabilization in its discrete graphics business.
Meanwhile, shares of Novell sank on reports the auction of the company's Netware and identity management products are dragging, according to Reuters.
Consumer stocks got a boost from Bed Bath & Beyond, which rose after the home goods retailer beat quarterly profit and sales estimates on stronger sales.
Tiffany, however, slid after Goldman Sachs cut the luxury jeweler to "sell" from "neutral."
Elsewhere in the markets, McDonald'sslipped after the fast-food chain said it would increase its quarterly dividend by 11 percent.
Netflix shares rose after rival Blockbuster filed for bankruptcy, citing a shift in consumer preferences to downloading movies from the Internet.
Shares of Avis slipped after the rental car company raised its offer for Dollar Thrifty to about $1.52 billion, more than Hertz's offer of about $145 billion.
In other earnings news, shares of Rite Aid plunged after the drug-store chain reported a wider-than-expected lossin the fiscal second quarter, and issued a bleak outlook for the rest of the year.
Scholastic rose after the children's bookpublisher agreed to buy back up to $150 million shares in a modified Dutch auction.
And Vail Resorts declined after the ski resort operator reported a widening fourth-quarter loss because of a smaller tax benefit to its real-estate portfolio, and a grimmer outlook for the new year than anticipated.
Health care stocks were lower, including Abbot Labs , which voluntarily recalled baby formula after beetles were found in the products and in a Michigan plant where they are made. Abbot said addressing the issue will cost about $100 million.
Meanwhile, cigarette makers Lorillard and Altria slipped after Stifel Nicolaus downgraded the companies to "hold" from "buy."
On Tap This Week:
THURSDAY: Chicago Fed President Evans speaks; Volcker speaks; FCC meeting on opening up new airwaves; Earnings after-the-bell from Nike.
FRIDAY: Durable goods orders; New home sales; Richmond Fed President Lacker speaks; Philadelphia Fed President Plosser speaks; NY Film Festival; Earnings from KB Home .
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