Techs rally, broader market struggles

NEW YORK (CNNMoney.com) -- Tech stocks rallied Thursday, lifted by strength in Apple, Google and other issues hitting new highs, but the broader market ended mixed ahead of Friday's widely awaited June job report.

The Dow Jones industrial average (down 11.46 to 13,565.84, Charts) slipped 0.1 percent, snapping a three-session winning streak, though the 30-share index ended off its lows for the session. The broader Standard & Poor's 500 index (up 0.53 to 1,525.40, Charts) inched higher.

But Thursday's big winner was the tech-heavy Nasdaq composite index (up 11.70 to 2,656.65, Charts), which climbed 0.4 percent and closed at a fresh 6-1/2 year high.

Stocks rose Monday and Tuesday, ahead of the July 4 holiday but all three major gauges turned lower early Thursday as bond yields rose after a report showing surprising strength in the service sector rekindled worries about higher interest rates. Financial markets were closed Wednesday for Independence Day.

While the Nasdaq made strides in afternoon trading, the rate worries weighed on the broader market. The Dow ended lower for the first time since last Thursday.

"Higher yields are concerning investors," said Alan Lancz, money manager and editor of the Lancz Letter. Thursday's economic numbers reinforced the view that the Federal Reserve won't cut rates anytime soon, he said, fueling rate worries on Wall Street.

"The second half [of 2007] is going to be much more volatile," he said.

The latest string of buyout news wasn't enough to boost blue chips. Late Tuesday, private equity firm Blackstone Group (up $0.91 to $30.63, Charts) said it was buying Hilton Hotels (up $9.34 to $45.39, Charts, Fortune 500) in a deal valued at $26 billion. Shares of the hotel chain jumped 26 percent, while rivals Marriott International (up $3.11 to $47.57, Charts, Fortune 500) and Star wood Hotels (up $5.42 to $74.55, Charts, Fortune 500) were also about 7 percent higher.

Private equity firm Apollo Management unveiled a $6 billion bid proposal for Huntsman Corp. (up $3.06 to $27.46, Charts, Fortune 500), sending shares of the the chemical company up 12.5 percent.

Coca-Cola (down $0.23 to $52.67, Charts, Fortune 500) said Wednesday it is evaluating whether to make a bid for Snapple, the iced tea division owned by British drinks company Cadbury Schweppes (down $0.03 to $53.77, Charts).

And Jones Apparel Group (up $0.20 to $28.60, Charts, Fortune 500) said it received an unsolicited bid from Fast Retailing Co. (Charts) to acquire Barney's New York (Charts) for $900 million.

In other corporate news, Kohlberg Kravis Roberts announced plans late Tuesday for a $1.25 billion initial public offering. The filing disclosed the high-profile firm has $53.4 billion in assets under management and earned $1.11 billion in 2006.

In the tech sector, shares of Research In Motion (up $8.25 to $216.19, Charts) climbed nearly 4 percent on news that the Blackberry maker scored permission to sell its handheld devices in China.

Google (Charts, Fortune 500) rose over 1 percent to set a new record high and Apple (up $5.58 to $132.75, Charts, Fortune 500) also gave the Nasdaq a boost after reports of strong sales momentum for its iPhone.

On the downside, General Motors (down $1.22 to $36.76, Charts, Fortune 500) was downgraded by Bear Stearns after the automaker reported a 21 percent drop in U.S. sales in June. The sales report, which came after the close of trading Tuesday, was much weaker than forecast. Shares of GM sank over 3 percent and was the biggest drag on the Dow.

After the closing bell, Dow component Microsoft (Charts, Fortune 500) said it would take a $1 billion charge for costs related to an extended warranty program for its Xbox 360, sending shares of the software maker lower in extended trade.

Of the 30 stocks in the Dow, 20 fell and 10 rose.

Market breadth was negative. On the New York Stock Exchange, losers topped winners by a margin of nine to seven on volume of 1.4 billion shares. On the Nasdaq, decliners edged out advancers as 1.7 billion shares changed hands.

On the economic front, investors' focus is turned to the closely watched June jobs report, due Friday morning an hour before the market opens. Economists surveyed by Briefing.com expect 135,000 new jobs and the unemployment rate to hold steady at 4.5 percent.

Earlier in the session, the Institute for Supply Management's services index unexpectedly rose in June, beating forecasts for a modest decline.

And the number of initial claims for jobless aid filed last week increased by 2,000, according to the Labor Department.

Treasury prices fell, lifting the yield on the 10-year note to 5.14 percent from 5.04 percent late Tuesday before the U.S. holiday.

The dollar rose against the euro and was higher versus the yen.

Oil prices eased after the EIA's report on U.S. fuel inventories. U.S. light crude fell 31 cents to $71.10 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery lost $4.80 to $650.60 an ounce.