NEW YORK (AP) - Wall Street moved higher Thursday after a batch of reports
pointed to an economy that is hurting, but not experiencing as rough a time as
many investors expected after the near-collapse of the mortgage market.
A pullback in oil prices and deal-making at major companies including
General Electric Co. and CBS Corp. also helped stocks stay afloat.
"The encouraging news is that the markets have become more functional, and
large companies are able to make strategic purchases and sales, which previously
was a very difficult thing to do," said Alan Gayle, senior investment strategist
for RidgeWorth Capital Management. Still, he added, "the market is still trying
to digest the severity of the slowdown."
Fears of a credit market meltdown have eased significantly. Federal Reserve
Chairman Ben Bernanke said in a speech in Chicago he is "encouraged" by recent
efforts by banks to raise cash -- a trend that is helping to relieve the credit
crisis.
But, Gayle said, "what we're left with now are cyclical credit strains. And
those are likely to linger for a while."
The Labor Department said the number of laid off-workers applying for
jobless benefits rose last week by 6,000 to 371,000 -- near the average analyst
forecast, and suggesting that the labor market remains weak but in check.
The Philadelphia Federal Reserve said regional manufacturing activity is
contracting in May at a slower pace than in April, and at a milder clip than
analysts expected. But the Fed said nationwide industrial output sank for the
second straight month in April by 0.7 percent, due to big cutbacks in the
automotive and other manufacturing industries. The drop was more than double
analysts' average prediction.
In late afternoon trading, the Dow Jones industrial average rose 42.66, or
0.33 percent, to 12,941.04.
Broader stock indicators also advanced. The Standard & Poor's 500 index rose
7.90, or 0.56 percent, to 1,416.56, and the Nasdaq composite index rose 23.66,
or 0.95 percent, to 2,520.36.
The technology-laden Nasdaq got a boost from Intel Corp., which rose 76
cents, or 3.2 percent, to $24.60 after a Lehman Brothers analyst lifted his
price target on the chip maker, citing strong product demand.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which
moves opposite its price, fell to 3.84 percent from 3.92 percent late Wednesday.
The dollar was lower against most other major currencies, and gold prices
climbed.
In deal-making news, CBS agreed to buy online technology news and
entertainment company CNet Networks Inc. for about $1.75 billion. The owner of
the CBS television network and TV stations said the deal will boost its online
presence and allow it to tap the growing market for online advertising.
CBS fell 75 cents, or 3 percent, to $24.07, while CNet rose $3.45, or 43
percent, to $11.40.
General Electric plans to auction off its Louisville, Ky.-based appliances
business, according to The Wall Street Journal. GE has hired Goldman Sachs Group
Inc. to run an auction for the appliance division, according to the newspaper,
which quoted unidentified sources. The sale is seen yielding between $5 billion
and $8 billion. GE slid 12 cents to $32.39.
Meanwhile, IAC/InterActiveCorp's Ask.com has bought a stable of Internet
reference sites that includes Dictionary.com in its latest effort to distinguish
itself from online search leader Google Inc. and other much larger rivals.
IAC/InterActiveCorp fell 2 cents to $23.71.
But as companies find the corporate climate more operation, another concern
remains: whether higher food and energy costs are hampering Americans' ability
to spend.
On the New York Mercantile Exchange, crude prices briefly surpassed $125 a
barrel, nearing record levels, but then retreated as options -- which let
investors bet on whether oil will fall or rise -- expired, and as natural gas
prices dropped. Crude for June delivery fell 10 cents in volatile trading to
$124.12 a barrel.
J.C. Penney's quarterly profit came in a bit better than expected, helping
its shares rise $1.40, or 3 percent, to $45.65, but it said a pullback in
consumer spending cut its first-quarter profit in half, and predicted
"difficult" conditions for the entire year.
The Russell 2000 index of smaller companies rose 4.64, or 0.63 percent, to
740.71.
Advancing issues led decliners by about 5 to 3 on the New York Stock
Exchange, where volume came to 795.9 million shares.
Overseas, Japan's Nikkei stock average rose 0.94 percent. Britain's FTSE 100
rose 0.58 percent, Germany's DAX index fell 0.03 percent, and France's CAC-40
rose 0.04 percent.
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