Late Buying Rush Sends Stocks Soaring
Thursday September 2, 7:22 pm ET
By Meg Richards, AP Business Writer
Buying Rush Sends Stocks Soaring Despite Mixed Data; Dow Surges 122, Nasdaq Climbs 23
NEW YORK (AP) -- Stocks strode higher in a late-session buying surge Thursday, as oil prices stepped back from their highs and investors shrugged off mixed economic data, focusing with renewed optimism on the government's upcoming jobs report. The Dow Jones industrial average jumped more than 120 points.
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Trading has been muted all week due to the Republican National Convention in New York and the upcoming Labor Day holiday. Investors were also looking ahead to an after-the-bell outlook from chipmaker Intel Corp. -- which came in gloomy, as expected -- and U.S. employment data scheduled to be announced Friday.
The markets grew increasingly more upbeat Thursday as rumors swirled among traders that President Bush would allude to bullish job growth numbers in his speech on the final night of the convention. Still, analysts were puzzled by the strength of the rally.
"Could it just be that there's no one in, volume is low, and there's nothing new negative?" asked Janna Sampson, director of Portfolio Management at Oakbrook Investments. "People might be thinking, 'You know, I want to be in for September, I want to do it today, and I'm taking a four-day weekend.'"
According to final results, the Dow soared 121.82, or 1.2 percent, to 10,290.28, its highest point in seven weeks.
The broader gauges also rose sharply. The Nasdaq composite index added 23.02, or 1.2 percent, to 1,873.43. The Standard & Poor's 500 index gained 12.40, or 1.1 percent, to 1,118.31. The sprint sent the S&P 500 back into positive range for the year, up 0.6 percent since the start of 2004.
In economic news, worker productivity rose a disappointing 2.5 percent in the spring, the smallest gain since late 2002. The reading by the Labor Department, which measures the amount an employee produces for every hour on the job, missed economists' estimates for a rise of 2.8 percent, and was down sharply from the 3.7 percent pace posted in the first quarter.
In a second report, the department said the number of new people signing up for unemployment benefits rose for the second week in a row, reflecting the lingering impact of Hurricane Charley. Economists were expecting claims to go down.
Separately, the Commerce Department said orders to U.S. factories grew by 1.3 percent in July, following a 1.2 percent advance in June. The increase was led by a big jump in demand for commercial aircraft and parts. Orders for nondurable goods, such as food products and chemicals, rose 1 percent for a second straight month.
Crude prices climbed after Russia's largest oil producer, Yukos, warned of a possible production halt following a Moscow court's decision to freeze its assets as part of an ongoing battle over back taxes. Light, sweet crude for October delivery was up 6 cents to settle at $44.06.
Investors were also holding their collective breath as Hurricane Frances took aim at Florida's eastern coast, less than three weeks after Hurricane Charley struck the state, pushing the nation's jobless claims higher and denting retail sales in the Southeast.
The fact that the market was up in spite of so many negative factors was cause for optimism, analysts said, and perhaps a sign that investors are setting aside some of the worries that kept them on the sidelines during the summer. It's almost as if the sellers are "getting a bit tired," said Bill Groenveld, head trader for vFinance Investments.
"The Olympics? No terrorism. Democratic convention? No terrorism. And now we're getting this other one out of the way," Groenveld said. "The market is kind of getting that funny feel like we might have seen the last of this downtrend. People are shrugging things off, we're feeling better ... I think we could be setting ourselves up for a decent fourth quarter as long as everyone plays nice through the presidential election."
There wasn't much encouragement for the high-tech sector in Intel's financial outlook, issued after the close of regular trading. The chip bellwether rose 20 cents to close at $21.63 on the Nasdaq Stock Market before the release, then sank 7 percent in extended trading after saying third-quarter revenue was likley to fall in the low end of its previous forecast.
The nation's retailers reported a third consecutive month of weak sales, as low-to-middle income shoppers became more frugal in response to rising energy and grocery bills and growing worries about the job market.
Wal-Mart Stores Inc., the world's largest retailer, was up 39 cents at $53.02 despite reporting a slim 0.5 percent increase in sales, missing Wall Street forecasts for a rise of 1.5 percent. Based on disappointing sales, Wal-Mart said it now believes third-quarter profits will be at the low end of its forecast.
Costco Wholesale Corp. was down 42 cents at $40.41 after reporting a 4 percent gain in sales, missing estimates of a 7.3 percent rise.
Advancing issues outnumbered decliners nearly 3 to 1 on the New York Stock Exchange. Consolidated volume came to 1.4 billion shares, compared to 1.42 billion traded Wednesday.
The Russell 2000 index, which tracks smaller company stocks, was up 7.32, or 1.3 percent, at 559.78.
Overseas, Japan's Nikkei stock average finished 0.2 percent higher Thursday. In Europe, France's CAC-40 added 0.6 percent, Britain's FTSE 100 rose 0.4 percent and Germany's DAX index was up 0.4 percent.
