NEW YORK (CNN/Money) -
A rally in technology propelled the Nasdaq Thursday, while some bearish analyst comments on General Motors and continued wariness about oil prices kept the Dow's gains in check.
The Nasdaq composite (up 22.80 to 1,881.06, Charts) gained around 1.2 percent, bouncing after hitting new 2004 lows during the session Wednesday.
The Standard & Poor's 500 (up 5.02 to 1,100.43, Charts) index added close to 0.5 percent and the Dow Jones industrial average (up 12.17 to 10,129.24, Charts) gained about 0.1 percent.
"The market's trying to stabilize," said Michael Sheldon, chief market strategist at Spencer Clarke. "We're seeing some strength in a few of the beaten-down sectors, including technology and basic materials."
However, he said that investors continued to be pulled in different directions as a result of fears of rising interest rates and the strength of the economy, as well as uncertainty about terrorism and the presidential election.
Friday brings several key economic data.
Due before the open is the first reading on gross domestic product growth in the second quarter. GDP is expected to have grown at a 3.7 percent annual rate, according to Briefing.com, down from a 3.9 percent rate in the first quarter.
Due shortly after the open, the July consumer sentiment index from the University of Michigan is expected to be revised up to 96.2 from an initial read of 96, and up from 95.6 in June.
Also due around the same time is the Chicago PMI, a regional read on manufacturing. The index is expected to have risen to 60 in July from 56.4 in June.
Investors will also be keeping an eye on oil prices.
"Despite the Democratic National Convention, the biggest story of the week has been energy prices," Sheldon added. "That's prevented the market from seeing a bigger rally off these oversold conditions."
On Wednesday, oil prices briefly rose to 21-year highs on reports that Russia might stop oil leader Yukos from making sales, due to ongoing financial problems at the company. Prices ended up closing the session lower, but the rise took its toll on stocks.
On Thursday, oil prices initially fell 1 percent after Russia's justice ministry said it wouldn't force Yukos to halt oil sales. But NYMEX crude oil prices ended up settling at $42.75, down just 15 cents from the previous session.
Chips cheer techs
Helping the chip sector was Taiwan Semiconductor (TSM: up $0.24 to $7.01, Research, Estimates), the world's largest contract chip manufacturer. The company gained about 3.25 percent after saying it will increase its capital spending this year, and it doesn't expect a decline in the chip cycle until 2006.
Intel (INTC: up $0.78 to $24.24, Research, Estimates), the world's largest chipmaker, rallied 3.5 percent. In addition, chip gear maker ON Semiconductor (ONNN: up $0.52 to $3.73, Research, Estimates) rallied 17 percent after the company reported earnings that topped estimates and improved from a year earlier.
The Philadelphia Semiconductor (up 11.70 to 411.19, Charts) index, or the SOX, rose close to 3 percent.
Shares of JDS Uniphase (JDSU: up $0.44 to $3.44, Research, Estimates) jumped 14.7 percent in active Nasdaq trade after reporting a fiscal fourth-quarter loss late Wednesday that was narrower than a year earlier and in line with expectations. The fiber-optic gear maker also boosted its first-quarter revenue forecast.
Two brokerages initiated coverage on Dow component IBM (IBM: up $0.92 to $86.77, Research, Estimates) with positive ratings.
Credit Suisse First Boston initiated coverage with an "outperform" rating and a $100 price target, saying the company should do well as corporate spending picks up. CIBC World Markets started coverage on the stock with a "sector outperform" rating.
CIBC also started coverage on Yahoo! (YHOO: up $0.79 to $30.49, Research, Estimates) with a "sector outperform" rating.
"We've got a big rally in tech going and it's a nice change of pace," said Tom Schrader, managing director of U.S. equity trading at Legg Mason.
"Markets have been so oversold over the last few weeks, and it's reached a point where people are willing to get back in," he added. "I think you're going to see the markets higher for at least another few days, beyond that, I don't know."
GM gets a flat
But General Motors (GM: down $1.37 to $42.75, Research, Estimates) lost 3.1 percent after Goldman Sachs and Lehman Brothers both downgraded the stock. Goldman Sachs said the company is in danger of missing estimates in either 2004 or 2005, due to high inventories and falling market share. Lehman cited similar concerns in its note.
Bristol-Myers Squibb (BMY: down $1.00 to $22.57, Research, Estimates) lost 4.2 percent after the company reported second-quarter results that weakened from a year ago and warned that 2005 and 2006 earnings would miss estimates due to patent expirations and generic competition.
Coca-Cola Enterprises (CCE: down $4.40 to $20.63, Research, Estimates), the world's largest bottler of Coca-Cola (KO: down $0.62 to $43.06, Research, Estimates), tumbled more than 17 percent in active NYSE trade after the company reported second-quarter earnings that fell from a year earlier and were shy of estimates, due to higher costs and lower sales in Europe. The company also warned that third-quarter results would miss expectations.
In other news, Krispy Kreme Doughnuts (KKD: down $2.95 to $15.71, Research, Estimates) said the U.S. Securities and Exchange Commission had started an informal probe into the company's accounting, sending shares tumbling.
In the session's biggest earnings news, Dow component Exxon Mobil (XOM: up $0.22 to $46.03, Research, Estimates) said it earned 88 cents per share, up from 62 cents a year earlier and in line with the analysts' predictions.
Market breadth was positive. Advancers beat decliners by 11 to 5 on the New York Stock Exchange, where volume hit 1.52 billion shares. Volume on the Nasdaq was 1.70 billion, with winners beating losers by more than two to one.
Investors seemed to take in stride the morning's mixed economic news, including a report that the number of people filing new claims for unemployment last week rose more than expected.
Treasury prices rose, pushing the 10-year note yield down to 4.56 percent from 4.58 percent late Wednesday. Treasury prices and yields move in opposite directions. The dollar gained versus the yen and was barely changed versus the euro.
COMEX gold fell $2 to settle at $389.80 after posting earlier gains.
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