NEW YORK (AP) - The stock market notched its second straight daily advance
Thursday, with investors assuaged by a pullback in oil prices and some
better-than-expected economic data.
Wall Street has been worried about cash-strapped consumers paring back their
spending, so it was pleased that the energy markets gave up early gains that
briefly drove crude oil above $125 a barrel.
In other positive signs, the Philadelphia Federal Reserve said regional
manufacturing activity is contracting in May at a much slower pace than in
April, while major companies including General Electric Co. and CBS Corp. were
making deals.
"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 an ongoing credit market paralysis 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 Dow Jones industrial average rose 94.28, or 0.73 percent, to 12,992.66.
Broader stock indicators advanced more than 1 percent to their highest
closing levels since Jan. 3. The Standard & Poor's 500 index rose 14.91, or 1.06
percent, to 1,423.57, and the Nasdaq composite index rose 37.03, or 1.48
percent, to 2,533.73.
The technology-laden Nasdaq got a boost from Intel Corp., which rose $1.13,
or 4.7 percent, to $24.97 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 3.82 percent from 3.92 percent late Wednesday.
The dollar was lower against most other major currencies, and gold prices
climbed.
In other economic data, 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.
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.
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 59 cents, or 2.4 percent, to $24.23, while CNet rose $3.47, or 44
percent, to $11.42.
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 14 cents to $32.37.
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 operational, a separate
concern remains: whether higher food and energy prices are hampering Americans'
ability to spend. Jim Herrick, manager of equity trading at Baird & Co., said
oil's retreat Thursday helped boost the stock market, but that the cost of
energy remains a concern.
"At the end of the day, it's still affecting consumers and the way consumers
spend," Herrick said. "It's definitely at the forefront of investors' minds."
J.C. Penney's quarterly profit came in a bit better than expected, helping
its shares rise $2.07, or 4.7 percent, to $46.32, but it said a decline 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 7.31, or 0.99 percent, to
743.38.
Advancing issues led decliners by more than 2 to 1 on the New York Stock
Exchange. Consolidated volume amounted to 3.73 billion shares, down from 3.86
billion shares traded Wednesday.
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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