Stocks gain as reports recharge investor hopes
• Hawai'i Stocks
• Updated Market Chart
By Hope Yen
Associated Press
NEW YORK — Wall Street pushed higher today as a drop in jobless claims and an upbeat outlook from IBM recharged investors' hopes that the economy was improving.
Analysts said many investors were brushing off mixed economic data in favor of news suggesting rebounding corporate profits by year's end.
"It's three steps forward, two steps back," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray. "Investors are looking towards the second half of the year and ignoring what will be an average second quarter."
But he added, "caution is still the watchword. People are expecting the market to pull back because it had a pretty dynamic move in the last two months."
The Dow Jones industrial average closed up 65.32, or 0.8 percent, at 8,713.14, nearly wiping out a two-day loss of 78 points.
The broader market also advanced. The Nasdaq composite index rose 16.48, or 1.1 percent, to 1,551.38. The Standard & Poor's 500 index gained 7.39, or 0.8 percent, to 946.67.
The Labor Department reported that new applications for jobless benefits fell by a seasonally adjusted 13,000 to 417,000 last week, the third straight week of declines. Analysts were expecting claims to rise.
The department also said that wholesale prices plunged by a record 1.9 percent in April, compared to a 1.5 percent gain in the previous month. The report seemed to underscore that inflation isn't a problem, although it could stoke fears of deflation.
However, in another report, the Federal Reserve said production at the nation's factories, mines and utilities fell in April by 0.5 percent. Economists had forecast a 0.4 percent decline.
Investors have sent stocks higher in recent weeks on encouraging earnings but are looking for signs of a rebound by year's end. Until they see that evidence, trading will be choppy, analysts said. "While things aren't great yet, they are starting to look up," said Ed Peters, chief investment officer at PanAgora Asset Management Inc. "As long as interest rates stay low, it will put a bottom on the stock market."
IBM rose $1.20 to $89.90 after the company's chief executive said demand in the technology sector is stabilizing.
Computer Associates climbed $2.07, or 11.4 percent, to $20.26 after reporting quarterly earnings that beat Wall Street's estimates. However, it also disclosed it had received two more federal subpoenas in connection with its accounting practices.
Intuit advanced $2.83 to $41.81 after reporting fiscal third-quarter operating earnings that beat estimates by 4 cents per share.
Decliners included Target, which fell $1.47 to $34.46, after first-quarter earnings fell a penny short of analysts' expectations.
Advancing issues outnumbered decliners about eight to five on the New York Stock Exchange. Volume was moderate at 1.44 billion shares, compared with 1.38 billion yesterday.
The Russell 2000 index of smaller company stocks rose 2.61, or 0.6 percent, to 422.05.
Japan's Nikkei stock average finished 1.5 percent lower today. In Europe, France's CAC-40 gained 1.2 percent, Britain's FTSE 100 rose 0.9 percent and Germany's DAX index climbed 2.2 percent.
