NEW YORK (CNN/Money) -
Stocks snapped back Wednesday, recovering from Tuesday's drubbing, thanks in part to a rebound in the dollar.
The Dow Jones industrial average (up 53.65 to 10,494.23, Charts), the Standard & Poor's 500 (up 5.74 to 1,182.81, Charts) index and the Nasdaq composite (up 11.45 to 2,126.11, Charts) all gained around 0.5 percent.
Gains were broad based, with 21 out of 30 Dow components gaining.
The sharp decline on Tuesday followed a six-week rally and seemed to be part of a necessary consolidation, analysts said, rather than a new direction for the market.
"Yesterday was a head scratcher, we sold off for no big reason," said Art Hogan, chief market analyst at Jefferies & Co. "So today we're back to the fundamentals, and we're bouncing off yesterday."
Helping sentiment was a recovery for the greenback.
In currency markets, the dollar rallied versus the yen and gained versus the euro, recovering from recent all-time lows against the European currency.
COMEX gold tumbled $15 to settle at $438.70 an ounce, falling with other dollar-traded commodities, including silver and copper.
"I think the dollar's recovery has a huge impact on the market, when you look at things like gold, which is getting tattooed today," Hogan added. "I also think it's important psychologically, like when oil finally peaked in the mid-50's."
After the close Wednesday, Procter & Gamble (Research), a Dow component, lifted its fiscal second-quarter and fiscal 2005 sales forecast, citing improved shipments and the help of the weak dollar, which can boost profits internationally.
The consumer products company also said it is comfortable with analysts' earnings per share forecast for the same period.
Chip makers Xilinx and Altera both warned that sales would fall more substantially in the current-quarter than previously thought. The announcements were part of the chip makers' mid-quarter updated. Shares of Xilinx (Research) fell almost 8 percent after-hours, while Altera (Research) shares lost 8.5 percent.
The weekly jobless claims report is due before the bell Thursday. The number of Americans filing new claims for unemployment is expected to have fallen to 335,000 last week from 349,000 the previous week.
Due after the start of trading, the report on wholesale inventories is likely to show a rise of 0.5 percent in October after rising 0.5 percent in September.
What moved
Merck (up $0.80 to $28.69, Research) gained 2.9 percent despite warning that 2005 earnings per share will miss expectations because of its recent withdrawal of the arthritis treatment Vioxx. The Dow component also confirmed that it was on track to meet already lowered 2004 expectations.
Fellow Dow component IBM (up $0.55 to $96.65, Research) confirmed that it was selling its PC-business to China's Lenovo Group, as had been unofficially reported Tuesday. Lenovo will pay $1.25 billion in cash, stock and assumption of debt. While the deal was for a lower price tag than had been suggested, it was generally seen as positive by analysts.
IBM stock rose 0.6 percent.
Other Dow gainers included Home Depot (up $0.79 to $42.56, Research), General Electric (up $0.40 to $35.71, Research) and United Technologies (up $1.54 to $98.19, Research).
On the downside, chip stocks were weaker.
Texas Instruments (down $0.97 to $24.05, Research) issued its mid-quarter forecast after the close Tuesday. The company said it expects fourth-quarter sales and earnings per share to hit the mid range of its previous forecast, due to still middling order trends. Shares fell more than 3.9 percent.
Intel (down $0.47 to $23.01, Research) and Advanced Micro Devices (down $0.59 to $22.90, Research) both declined as well. The Philadelphia Semiconductor (down 5.60 to 431.91, Charts) index, or the SOX, fell 1.3 percent.
Shares of Sirius Satellite Radio (down $2.11 to $6.90, Research) tumbled 22.6 percent and topped the Nasdaq's most-active list after Smith Barney cut its rating to "sell" from "hold," citing valuation.
The stock's been on a tear since October, when shock jock Howard Stern said he would leave Viacom's Infinity Broadcasting to host a show for the pay radio service, starting in 2006.
Market breadth was positive. On the New York Stock Exchange, advancers beat decliners 10 to 7 on volume of 1.52 billion shares. On the Nasdaq, winners topped losers 9 to 7 on volume of 2.40 billion shares.
U.S. light crude oil for January delivery rose 48 cents to settle at $41.94 a barrel on the New York Mercantile Exchange. Crude had risen even more in the late morning following the release of the weekly inventory numbers, which showed a smaller-than-expected rise in heating oil stocks.
A few weeks ago, any rise in oil prices might have sparked a big sell-off.
"What's interesting is the change in how oil prices are influencing us," said Mark Bryant, senior vice president at Brean, Murray & Co. "Today oil [was] up and the market is holding up, yesterday oil was down, but we sold off anyway. We'll still keep an eye on it, day to day; but it clearly isn't as tied to the stock action as it has been."
Treasury prices rallied, pushing the 10-year note yield down to 4.11 percent from 4.22 percent late Tuesday. Bond prices and yields move in opposite directions.
|
