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Markets & Stocks
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Stocks struggle to end up
Investors' optimism brings the Nasdaq to its highest point since June as stocks manage small gains.
May 28, 2003: 5:36 PM EDT
By Meghan Collins, CNN/Money Staff Writer

NEW YORK (CNN/Money) - U.S. stock markets managed to squeeze out gains Wednesday, ending the day higher on the back of the previous session's strong rally, as investors extended their hopes for an economic recovery.

The Nasdaq composite (up 6.55 to 1563.24, Charts) rose 0.4 percent, while the Dow Jones industrial average (up 11.77 to 8793.12, Charts) eked out a 0.1 percent gain and the S&P 500 index (up 1.74 to 953.22, Charts) managed a 0.2 percent rise. The gains brought the S&P to its top level in nine months, and the Nasdaq to its highest peak since June 5, 2002.

"The markets are hanging on nicely, considering the massive gains yesterday," said Art Hogan, chief market analyst at Jefferies & Co. "Clearly, if the market can hold onto its gains from yesterday, and through the weak durable goods report today, the path of least resistance is upside."

The day's rather downbeat economic report -- durable goods orders fell more than expected, 2.4 percent, in April -- weighed only modestly on stock buyers. For more than a month now the belief on Wall Street has been that economic reports for April are still likely to bear the scars of the war in Iraq, so whatever bad news they may carry should be more or less shrugged off.

This, however, has not been the case when the reports have actually been positive. Tuesday's readings on new and existing home sales, coupled with a rising consumer confidence index, were enough to fuel a powerful rally.

Traders said enthusiasm from the previous session fueled investors' hope that better times are ahead, and so they chose to brush off the weaker data of the day.

"We're off to the races, and the market seems to be saying that we're going to see an economic recovery," said Ram Kolluri, chief investment officer at GlobalValue Investors. "I'm in the camp that we're beginning to see early indications of an economic recovery."

But Kolluri cautioned investors against getting ahead of themselves, warning that corporations could end up unable to meet raised expectations in upcoming quarters.

Thursday could be an important day, as investors get to consider a revised reading on gross domestic product for the first quarter. First-quarter GDP growth is expected to be revised to 1.9 percent from the preliminary reading of a 1.6 percent annual growth rate, according to a Reuters poll.

Also due before the opening bell is the weekly jobless claims report, which has been garnering much attention lately as one of the more up-to-date economic indicators. Economists polled by Briefing.com forecast that new unemployment claims slipped to 420,000 last week from 428,000 in the previous week. But that number still remains above the key 400,000 level, indicating contraction in the jobs market.

Several companies are on the docket to report quarterly earnings results Thursday, including Petsmart (PETM: up $0.01 to $16.53, Research, Estimates), Qwest Communications (Q: down $0.03 to $4.70, Research, Estimates), Michaels Stores (MIK: up $0.83 to $36.23, Research, Estimates) and J.D. Edwards (JDEC: up $0.59 to $12.02, Research, Estimates).

Earnings boost stocks

Among the biggest gainers Wednesday, Krispy Kreme (KKD: up $2.32 to $34.18, Research, Estimates) surged 7.3 percent following its quarterly earnings report that showed a 46 percent profit improvement from a year earlier.

Retailer Costco (COST: up $1.43 to $37.35, Research, Estimates) followed suit with a gain of 4 percent after it posted fiscal third-quarter earnings that were stronger than a year earlier and higher than Wall Street expected.

Homebuilder Toll Brothers (TOL: up $1.05 to $28.50, Research, Estimates) also posted strong earnings that beat analysts' forecasts and saw its shares climb 3.8 percent.

Disney (DIS: up $0.57 to $19.44, Research, Estimates), Hewlett-Packard (HPQ: up $0.70 to $19.38, Research, Estimates) and McDonald's (MCD: up $0.49 to $18.26, Research, Estimates) were some of the biggest winners among the Dow stocks.

The chip sector saw some mixed news. Semiconductor maker Semtech (SMTC: down $1.50 to $15.40, Research, Estimates) shed 8.9 percent after it logged a first-quarter profit in line with Wall Street estimates but sharply down from a year ago.

But Rambus (RMBS: up $1.11 to $17.55, Research, Estimates) jumped nearly 6.8 percent after it announced that a shareholder lawsuit against the company had been dismissed.

Tech stocks got a lift from a survey conducted by Merrill Lynch indicating that chief investment officers are more likely to spend their budgets this year than they were last year. The survey, given to 75 U.S. and 25 European CIOs, showed they are more likely to spend money on storage, security and enterprise resource planning software this year.

Market breadth was positive and volume was heavy, especially on the Nasdaq, where 2 billion shares traded and winning stocks beat out losers by a margin of about three to two. On the New York Stock Exchange, some 1.5 billion shares changed hands and close to nine stocks rose there for every seven that fell.

The dollar gained hefty ground against major currencies, including the euro and the yen, after talk surfaced in the market that the European Central Bank might cut interest rates next week. The dollar fell to a new low against the euro early Tuesday before it began to recover.

Bonds were mixed, with the 10-year note's yield rising to 3.42 percent as its price fell 1/16 of a point.

Oil prices slipped, with light sweet crude for July delivery dipping 77 cents to $28.58 a barrel in New York. Gold for June delivery sank $2.60 to $366.20 an ounce in New York.

Stocks rose in Asia overnight and European markets also ended the day mostly higher.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.