Stocks End Broadly Higher; GM Rises 3%
Stocks shed losses from earlier this week to close broadly higher Thursday, lifted by the successful return of General Motors to the U.S. stock market and relief that Ireland was addressing its debt crisis.
TheDow Jones Industrial Average rose 173.35 points, or 1.6 percent, to close at 11,181.23.
General Motors priced its stock offering at $33 per share last night. Shares climbed 7 percent immediately after the launch, and ended about 3 percent higher recently. The listing could net GM $23 billion and will reduce the government's stake in the company to below 40 percent from 60 percent.
Most Dow components rose, led by Alcoa, Boeing and Caterpillar . Intel fell.
The S&P 500 rose 18.10 points, or 1.5 percent, to close at 1,196.69, after hitting 1,200 in intra-day trading. The Nasdaq rose 38.39 points, or 1.5 percent, to close at 2,514.40. The CBOE Volatility Index, widely considered the best gauge of fear in the market, plunged more than 13 percent to below 19.
The key S&P sectors all gained, led by energy, materials and technology.
The GM offering, which fueled a global stock rally, was boosted by demand from big North American mutual and pension fund investors, according to sources quoted by Reuters. Rival Ford fell more than 3 percent.
Just before the close, the stock was trading at about $34 a share, meaning traders who bought the shares at the open have lost $1 a share, or about 3 percent.
About 22 percent of volume on the NYSE floor Thursday was in GM stock.
The strong performance of the stock at launch, and the fact the once-bankrupt automaker, and symbol of American business, has overcome obstacles to return to the market will likely bring investors back to stocks, said Todd Schoenberger, managing director at LandColt Trading.
"It's a great story for the markets, the economy, and for investing," Schoenberger said. "I think retail investors will see the power in that."
GM's shares should continue to trade higher considering the enthusiasm and volume in the stock so far, with more than 100 million shares changing hands in its first 30 minutes of trading, he said. Schoenberger estimates that based on GM's projected earnings, the stock should trade at $38 a share.
About 345 million shares of GM stock have already changed hands on the New York Stock Exchange.
The market began the session with a more upbeat tone on anticipation of the GM launch, as well as news that Ireland's central bank chief said he expected the country to receive a "very substantial" bailout amounting to tens of billions of euros. The dollar rose against the euro, but fell against a basket of currencies.
The weaker dollar gave a boost to commodities and commodity-related stocks. Gold rose more than 1 percentto trade around $1,350 an ounce, while precious and industrial metals stocks also advanced, including Alcoa and US Steel as well as Freeport-McMoran Copper & Gold and Newmont Mining .
Allegheny Technologies , meanwhile, gained after news it would acquire Ladish , another metals producer, for about $778 million in cash and stock.
Retailers continued to rally Thursday as more companies reported earnings, although the reports delivered mixed results.
Staples rose after the office supply chain store posted a boost in profit thanks to cost cuts, while Sears shares tumbled to the bottom of the S&P 500 after the department store retailer reported a wider-than-expected quarterly loss.
Dollar Tree fell despite reporting profit that beat expectations as consumers spent more per visit. The firm also raised its outlook for the fourth quarter.
Limited Brands soared after the retailer raised its profit forecast for the year on Wednesday, as consumers have been willing to pay full price for its apparel. The owner of Victoria's Secretand Bath & Body Works also credited expense and inventory controls for its better outlook.
In addition, Buckle shares also jumped after the casual apparel retailer said its profit rose more than 3 percent on stronger sales. Children's Place advanced even after the kids' apparel retailer reported a 17 percent drop in earnings.
However, Williams-Sonoma plunged more than 10 percent after the kitchenware retailer issued a
Gap is the next major retailer that is slated to report earnings, due after-the-bell Thursday. Tech giants Dell and Marvell are also expected to announce results.
NetApp surged after the computer storage and data management company reported a profit that soared 72 percent. However, brokerages were mixed. Canaccord and S&P Equity raised their ratings to "buy" from "hold" on the firm, while RBC cut the company's price target to $56 a share from $61.
And Applied Materials rose after the equipment producer posted earnings well-above estimates. But the firm's revenue forecast for the current quarter was on the low side of expectations. Stifel cut its price target on the company to $15 from $16.
Meanwhile, health insurer Humana slumped after it projected a decline in 2011 earnings, citing a return to higher medical costs and changes to Medicare.
Also on the health care front, Cardinal Health jumped more than 6 percent after the drug wholesaler said it plans to buy privately held pharmaceutical distributor Kinray for $1.3 billion to boost its presence in the northeastern United States.
Donaldson soared after the maker of filtration and exhaust control products, posted quarterly results above estimates, helped by higher sales at its engine products unit, and forecast full-year results above estimates.
Oil prices rose to more than $82 a barrelas the situation in Europe gained more clarity. Energy stocks were mostly higher, including oil services companies Halliburton and Schlumberger , as well as oil giants ExxonMobil , ConocoPhilips , and Chevron .
And in the day's economic news, the leading economic indicators and the Philadelphia Federal Reserve survey, showed the U.S. economy gaining strength, providing further help to the market.
The Leading Economic Index rose 0.5 percent in October, the same as a revised gain for September. The gain follows a 0.1 percent rise in August, according to the Conference Board.
The Philadelphia Federal Reserve Bank's index of business activity index soared to 22.5 in Novemberfrom 1.0 in October, more than expected.
Materials and industrials rose following the report including Alcoa , General Electric and Caterpillar .
In addition, initial claims for unemployment benefits rose 2,000 to a seasonally adjusted 439,000 last week, the Labor Department said. Economists surveyed by Reuters had expected claims to rise to 440,000. The previous week's figure was revised higher to 437,000 from 435,000.
The four-week average of new jobless claims fell 4,000 to 443,000, the lowest level since the week ending Sept. 6, 2008.
On Tap Friday:
Bernanke speaks at ECB Central Banking Conference, Harry Potter movie premieres; Earnings from Heinz.
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