By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks built on advances from the
previous session and closed modestly higher on Thursday, with
high-growth and small-cap companies leading gains. Investors
appeared to shrug off softer economic data, including jobless
claims and existing-home sales.
Analysts noted that while markets are inching higher, the
disconnect between low bond yields and divergence between
small-caps and large-caps is a concern for investors.
The S&P 500 (SPX) closed 4.46 points, or 0.2%, higher at
1,892.49. The Dow Jones Industrial Average (DJI) gained 10.02
points, or 0.1%, to 16,543.08. The Nasdaq Composite (RIXF) ended
the day up 22.80 points, or 0.6%, at 4,154.34., with biotech
companies leading gains. The Nasdaq Biotechnology index rose
1.9%.
Read the recap of MarketWatch's live blog of today's
stock-market action.
Keith Springer, president of Springer Financial Advisors, says
that Thursday gains are a continuation of the Fed minutes
reaction.
"The stock market should have rallied stronger yesterday when
the Fed minutes revealed that Fed is not going to take away the
punch bowl any time soon," Springer said.
"But the larger issue is that the bond market -- where the
10-year yield is at 2.5%, is most likely correct to think the
economy is weakening. Therefore we expect a 10%-15% correction in
the stock market this summer," he added.
Jim Russell, senior equity strategist at U.S. Bank Wealth
Management, says softer economic data are beginning to concern
investors.
"If the economy continues to grow very tepidly by the end of the
year, when the Fed has exhausted its bond-buying stimulus program,
what other tools will they have to ramp up growth? That question is
worrying investors more than when the rate hikes will come,"
Russell said.
In economic news, new applications for unemployment benefits
rose sharply in mid-May, reversing a big drop earlier in the month
that put initial claims at a seven-year low.
Sales of existing homes rose 1.3% in April to a seasonally
adjusted annual rate of 4.65 million, the National Association of
Realtors reported Thursday, mostly in line with expectations. More
housing on the market is bright spot in sales report, economists
say.
In earnings news, Hewlett-Packard Co. (HPQ) reported a fiscal
second-quarter profit that was mostly in line with expectations.
H-P also announced that it is eliminating an additional 11,000 to
16,000 jobs. Shares were down 4% after hours.
Aeropostale Inc. (ARO) reported a wider loss than expected. The
casual apparel retailer said sales fell 12%. Shares plummeted 11%
after hours.
Best Buy (BBY) shares closed 3.4% higher after the retailer's
adjusted first-quarter profit beat expectations.
Dollar Tree (DLTR) posted first-quarter results that were in
line with expectations. Shares rallied 6.6%.
Sears Holdings (SHLD) said it would close 80 stores this year as
its fiscal first-quarter loss widened amid falling revenue and weak
same-store sales. Shares rebounded after being lower and closed up
4.2%.
Shares of Williams Sonoma Inc. (WSM) rose 8.2% after the
kitchenware retailer late Tuesday reported a rise in its
first-quarter profit, beating forecasts.
European stocks got a boost from preliminary euro-zone PMI data
that confirmed business activity in the region continued to pick up
in May. In Asia, the Nikkei 225 index was the best-performing
market, up 2.1% after Markit released its first-ever preliminary
version of Japan's manufacturing index, which rose to a two-month
high of 49.9 in May.
Gold for June delivery (GCM4) settled higher, recouping losses
from a day earlier and then some. Crude for July delivery (CLN4)
closed below $104 a barrel, pulling back from a one-month high as
traders assessed the prospects for energy demand.
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