Nasdaq gains, Dow struggles
Tech index surges but Dow and S&P 500 struggle after ending previous session at record highs.
NEW YORK (CNNMoney.com) -- The Nasdaq flirted with a new six-year high Thursday afternoon, thanks to the latest round of deal-making, but the Dow and S&P 500 struggled after ending the previous session at all-time records.
The Dow Jones industrial average (up 6.50 to 13,639.58, Charts) added a few points with about 90 minutes left in the session. The blue-chip barometer briefly touched a new intraday high of 13,672.82 in the morning after ending the previous session at a fresh closing high.
The broader S&P 500 index (up 2.03 to 1,532.26, Charts) crept higher after ending the previous session at a record high, taking out the old record from March 2000, at the top of the bull market sparked by the late 1990s tech rally.
The Nasdaq composite (up 8.58 to 2,601.17, Charts) gained 0.3 percent, after ending the previous session at a 6-year high.
All three major gauges had risen in the morning, as investors welcomed the latest deals and a drop in oil prices. But the blue-chip averages struggled to maintain gains, as the session wore on, and oil prices rebounded.
Additionally, investors were sorting through the session's big batch of economic news.
Reports on manufacturing, construction and jobless claims showed improvement. But first-quarter economic growth came in weaker than first thought, at the slowest pace since 2002.
GDP grew at just a 0.6 percent annual rate in the first quarter, the government said Thursday morning, down from its initial read of 1.3 percent. Analysts expected growth of 0.8 percent. But other reports released in the morning were more upbeat.
The Chicago PMI, a measure of manufacturing in the Midwest region, rose to 61.7 in May from 52.9 in April. Economists surveyed by Reuters thought it would rise to 54.0, on average.
Construction spending rose 0.1 percent in April, versus forecasts for an unchanged reading, after rising 0.6 percent the previous month.
And the number of Americans filing new claims for unemployment last week fell more than expected.
Taken as a whole, the reports seemed to suggest that the economy is chugging along, but not so fast or so slow as to raise concerns.
"I guess a good way to sum it up is we're seeing growth, slow growth, but growth nonetheless," said Douglas Roberts, managing principal at Channel Capital Research.
In terms of the Federal Reserve, the reports suggest the central bank's going to stay "steady as she goes," Roberts said, noting the Fed is still unlikely to cut or raise interest rates anytime soon.
Stocks rallied Wednesday, with the Dow and S&P 500 ending at all-time highs as investors focused on the positive parts of the minutes from the last Fed policy meeting, including the banker's observation that risks to the economy have lessened.
The minutes helped cool some worries sparked by a selloff in global markets, following a pummeling in Chinese stocks after the government tripled the tax on share trades in a bid to slow the surging stock market.
With the Dow, S&P 500 and Russell 2000 at all-time highs, concerns have again been raised about whether stocks are in for a bigger retreat, particular with the economic outlook still uncertain.
While such a pullback is a possibility, Roberts said, the risks are being countered by the ongoing flow of money into the stock market, both in the United States and from abroad, through takeovers, mergers and corporate stock buybacks.
In the next few months, the bigger risk may be from the calendar, when light summer trading can lead to bigger day-to-day swings in the market.
Thursday brought its share of M&A and other corporate news.
Wachovia (down $0.35 to $54.20, Charts, Fortune 500) is buying A.G. Edwards (up $10.54 to $87.69, Charts) for $6.8 billion in cash and stock in a move that will create the second-largest U.S. retail brokerage. Wachovia shares slipped while A.G. Edwards shares jumped 13 percent.
Ceridian (up $1.06 to $35.25, Charts), a payroll processor, agreed to be bought out by private equity firm Thomas H. Lee Partners and insurance firm Fidelity National Insurance for $5.3 billion in cash. Ceridian gained 3 percent.
In other news, Dendreon (up $2.27 to $9.01, Charts) rallied 28 percent in active Nasdaq trade on bets that its prostrate cancer treatment Provenge is closer to getting approval. The biotech said that the Food and Drug Administration could grant Provenge approval next year if its current trial shows positive results.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 9 to 7 on volume of 1.04 billion shares. On the Nasdaq, advancers topped decliners by 8 to 7 on volume of 1.55 billion shares.
U.S. light crude oil for July delivery rose 60 cents to $64.09 a barrel on the New York Mercantile Exchange. Prices were volatile following the weekly oil inventories report, which showed a surprise drop in crude oil supplies.
Treasury prices slipped, raising the yield on the 10-year note to 4.90 percent from 4.87 percent late Wednesday. Bond prices and yields move in opposite directions.
In currency trading, the dollar gained modestly versus the euro and the yen.