Tech stocks lead markets

NEW YORK (CNNMoney.com) -- Stocks inched higher Thursday as strength in the technology sector added some stability to an otherwise rocky session plagued by troubling news from Bear Stearns and bond insurer MBIA.

The Dow Jones (INDU) industrial average gained nearly 0.3 percent. The broader S&P 500 (INX) index gained nearly 0.5 percent. The tech-fueled Nasdaq (INX) composite gained 1.5 percent.

Treasury prices rose. The dollar was higher against the euro but fell against the yen. Oil and gold prices slipped.

Stocks opened higher Thursday morning, despite news of a writedown by Wall Street fixture Bear Stearns and weak earnings from FedEx.

But the session turned mixed in afternoon trade with the Nasdaq leading other major indexes. Near the close, stocks regained some momentum to close slightly higher.

Friday brings a University of Michigan report on consumer sentiment, which Wall Street monitors for information on consumer spending habits.

After the closing, BlackBerry-maker Research In Motion Ltd (RIMM) reported strong third-quarter earnings, sending the company's stock up 14 percent after hours.

From the financial sector, Bear Stearns (BSC, Fortune 500) announced a quarterly loss of $854 million, or $6.90 a share; analysts were expecting the company to report a loss of $1.79 a share. The Wall Street bank also said it would take a writedown of $1.9 billion on its mortgage securities.

Credit concerns have been heightened recently as bond insurers have seen their credit ratings threatened by fallout from the subprime mortgage debacle.

Bond insurers cover interest and principal payments on the bonds they guarantee if the bond issuer defaults. Bonds backed by mortgages have become increasingly suspect as the housing market continues to deteriorate, raising questions about the bond insurer's ability to guarantee them.

Ratings agency S&P lowered its outlook for a number of major bond insurers Wednesday including MBIA, the country's largest bond insurer. Late on Thursday, Fitch Ratings service also warned that it might cut its rating on MBIA.

MBIA (MBI) announced a surprise $8.1 billion writedown Wednesday due partly to mortgage-backed securities. Shares of the company were down as much as 27 percent.

Investors worry that more credit market strife could result if MBIA's credit rating is downgraded.

Also adding volatility, stock index futures and options and individual stock futures and options will all expire simultaneously this Friday, a phenomenon called "quadruple witching."

The number of shares changing hands in today's session was abnormally low, notes Robert Philips, president and CEO of Walnut Asset Management, suggesting that the sentiment on Wall Street is cautious.

"People are waiting to see what happens with the credit mess," Philips said.

However, Philips thinks that the outlook for next year is improving. "Even if earnings are flat next year and interest rates remain where they are, valuations are extraordinarily attractive. If people are patient, there's a lot of money to be made next year," he said.

In corporate news, package delivery company FedEx Corp., (FDX, Fortune 500) hurt by rising fuel costs, posted a 6 percent drop in revenue for the company's fiscal second quarter, and offered third quarter guidance that was lower than Wall Street's expectations.

Shares of Rite Aid Corp (RAD, Fortune 500). plunged more than 27 percent after the drugstore chain reported a loss and lowered its 2008 forecast.

On the bright side, shares of software-maker Oracle (ORCL, Fortune 500) gained nearly 8 percent in afternoon trading after the company reported better-than-expected earnings Wednesday.

Other technology stocks saw gains Thursday, including: Microsoft Corp (MSFT, Fortune 500), Intel Corp (INTC, Fortune 500) and Cisco Systems Inc (CSCO, Fortune 500).

And sports apparel-maker Nike (NKE, Fortune 500) posted a quarterly gain that beat Wall Street's expectations, citing strong international sales.

In economic news, the Commerce Department said Thursday that U.S. gross domestic product, the broadest measure of economic activity, was unchanged. The country's GDP grew at a pace of 4.9 percent in the July-to-September quarter, unchanged from an estimate made a month ago.

Meanwhile, the Conference Board said Thursday that its index of leading economic indicators, a metric of business activity, fell 0.4 percent in November, signaling the possibility of a recession next year.

Also, jobs data out Thursday from the Labor Department showed a sizable increase in the number of people applying for unemployment benefits last week, a potential sign of growing softness in the job market.

Market breadth turned positive. On the New York Stock Exchange, winners narrowly topped losers volume of 1.19 billion shares. On the Nasdaq, advancers beat decliners 3 to 2 on volume of 1.85 billion shares.

Treasury prices rose, lowering the yield on the 10-year note to 4.02 percent from 4.03 percent late Wednesday. Treasury prices and yields move in opposite directions.

U.S. light crude oil for February delivery fell 18 cents to $91.06 on the New York Mercantile Exchange.

In currency trading, the dollar gained versus the euro and fell versus the yen.

COMEX gold for February delivery fell $2.20 to $803.20 an ounce.