Stocks Finish Higher After Fitful Day

Stocks Finish Higher After Fitful Day02/07/08 17:29 EST
By MADLEN READ
NEW YORK (AP) - Wall Street finished moderately higher in fitful trading Thursday as investors, still nervous about the economy, decided to buy back into a stock market pummeled by three straight days of losses.
With the market having largely priced in the possibility of a recession, many believe there are plenty of valuable stocks at cheap prices. Before Thursday, the Dow Jones industrial average had fallen this week by 543 points, or 4.26 percent, giving up all of last week's sharp gains.
Though the market ended up rising Thursday, trading was extremely fickle due to a batch of gloomy data that included declining January sales at major retailers, a drop in December sales of pending homes, and a disappointing outlook from Internet networking supplier Cisco Systems Inc. The major indexes seesawed throughout the day.
"We're kind of trying to create a silk purse out of a sow's ear here," said Hugh Johnson, chief investment officer of Johnson Illington Advisors. "The earnings are lousy, the economic numbers are lousy."
The Dow rose 46.90, or 0.38 percent, to 12,247.00 after trading down about 80 points and up about 130. The index remains more than 13 percent below its record close on Oct. 9, 2007 of 14,164.53.
Broader stock indicators also recovered some ground. The Standard & Poor's 500 index rose 10.46, or 0.79 percent, to 1,336.91. The technology-heavy Nasdaq composite index rose 14.28, or 0.63 percent, to 2,293.03.
Government bonds fell. The 10-year Treasury note's yield, which moves opposite its price, rose to 3.76 percent from 3.60 percent late Wednesday.
Investors may have been encouraged to buy back into stocks due to a rise in the dollar, whose decline over the past several months has contributed to worries about inflation and a possible drop in foreign interest in U.S. investments.
Peter Cardillo, chief market economist at Avalon Partners, said the dollar's advance followed remarks by European Central Bank chief Jean-Claude Trichet that the United States and Europe remain economically intertwined. This suggested to investors that strength in other countries can help stabilize the United States during its rough patch. Fears of a global economic slowdown have been weighing on stocks around the world.
As expected on Thursday, the Bank of England lowered its key interest rate by a quarter percentage point to 5.25 percent, its second cut in three months, while the European Central Bank left its key rate unchanged at 4 percent.
Another argument for bargain hunting Thursday was that the recent spate of negative economic data raises the likelihood of the Federal Reserve lowering interest rates again to spur growth. Atlanta Fed President Dennis Lockhart said Thursday the Fed's "focus, religiously, is on the general economy, the real economy."
Moreover, the stock market often portends economic declines, rather than the other way around.
"Stocks do worse during times of slow growth than they do during recession," said Brian Gendreau, investment strategist for ING Investment Management. "If we're in a shallow and short recession, for all anyone knows, we might be halfway through."
The market's indecisive movements throughout the day show, however, that it has not moved past the many worries swirling about personal spending, the crumpling housing market and deteriorating conditions in consumer credit.
Late Wednesday, Internet networking supplier Cisco Systems Inc. issued a 10 percent sales growth forecast for its current quarter that fell well below the 15 percent Wall Street projected. But Cisco finished up 30 cents at $23.38, after some investors saw the stock was undervalued.
And in a counterintuitive move, retail stocks - also regarded as cheap right now - rose even after the nation's retailers logged their worst January in about 40 years. Wal-Mart Stores Inc. reported a 0.5 percent rise in January same-store sales, or sales at stores open for at least a year, while Target Corp., Gap Inc., Limited Brands Inc. and AnnTaylor Stores Corp. each said their sales fell.
Not all news about retailing was bad - J.C. Penney Co. raised its earnings forecast for the last three months of 2007. Its stock jumped $3.72, or 8.5 percent, to $47.44.
But on top of the mostly weak retail reports, the Labor Department reported that jobless claims fell last week by 22,000, a smaller decline than many economists predicted, and the National Association of Realtors said pending sales of existing homes fell 1.5 percent in December.
Light, sweet crude oil rose 97 cents to settle at $88.11 a barrel on the New York Mercantile Exchange. Gold prices also climbed.
Oil prices had been gradually declining, so it's possible a slower economy is keeping inflation from accelerating. Still, many market participants are anxious about how much longer the Fed can continue to lower interest rates given relatively high food and energy costs.
The Russell 2000 index of smaller companies rose 10.29, or 1.49 percent, to 702.78.
Advancing issues outnumbered declining shares by nearly 2 to 1 on the New York Stock Exchange, where consolidated volume came to 4.44 billion shares, down from 3.89 billion on Wednesday.
Overseas, many Asian markets were closed for a holiday, but Japan's stock market was open and its Nikkei average rose 0.82 percent. In Europe, Britain's FTSE 100 fell 2.58 percent, Germany's DAX index fell 1.66 percent, and France's CAC-40 fell 1.92 percent.

Canadian Dollar Mixed Versus Majors [USD/CAD]

The loonie was mixed against its major counterparts on Thursday. Investors mulled comments made by European Central Bank President Jean-Claude Trichet after the ECB decided to maintain its key interest rate.After today's ECB meeting, Trichet conceded that incoming data has confirmed the risks for Euro zone economic activity are to the downside, but was quick to point out that economic fundamentals are sound and that price stability remains the primary focus of the central bank.The loonie jumped to a monthly high versus the euro on Thursday. The Canadian dollar rose to 1.4581 by 1:00 pm ET, up from a morning low of 1.4751.Crude oil was down slightly in U.S. trading on Thursday after paring most of its losses. Light sweet crude for March delivery fell to $87.12, down 3 cents on the session. Oil fell as low as $86.24 in the early going, after reaching as high as $87.60 in electronic transactions.The Canadian dollar eased to a two-week low against the U.S. dollar on Thursday. The loonie slipped to 1.0127 by 8:30 am ET, down from 1.0047 earlier in the morning.Traders weighed two separate reports showing U.S. pending home sales fell more than economists had been expecting in the month of December and U.S. jobless claims fell by less than economists had been expecting compared to a two year high in the previous week.

Gold Closes Volatile Session Higher

Gold closed higher again on Thursday, adding to gains from the previous session. April-dated gold finished at $914.00, up $9 a pound. The precious metal climbed as high as $915.20 in electronic trading, but then dipped below its flat-mark before a mid-morning comeback. The metal snapped a six-session losing streak on Wednesday, moving back above the $900 mark. Gold closed at $905 an ounce, up $14.70 on the session. The metal climbed as high as $912 in mid-day trading as traders demonstrated they feel the recent slump was overdone. The metal plunged on Tuesday in U.S. trading and closed below $900 an ounce for the first time in more than two weeks. April-dated gold finished at $890.30, down $19.10 on the session. Prices slipped as low as $888.40 in the early going, gold's lowest level since Jan. 23. Gold dropped on Monday in U.S. trading amid some profit-taking after a recent rate cut-led rally. Bullion for March delivery closed the session at $891.40, down $18 on the session. Last week, gold had climbed as high as $941.80, just off its record high of $942.20, reached earlier last week.In economic news Wednesday morning, the Department of Labor released its preliminary report on productivity and unit labor costs in the fourth quarter, showing that productivity growth during the quarter came in well above economist estimates. The report showed that labor productivity increased by 1.8 percent in the fourth quarter compared to 6.0 percent growth in the third quarter. Economists had been expecting a much more modest increase of about 0.5 percent. The Labor Department added that unit labor costs rose 2.1 percent in the fourth quarter following a 1.9 percent decrease in the previous quarter.Meanwhile, pending home sales fell more than economists had been expecting in the month of December, according to a report released by the National Association of Realtors on Thursday, indicating continued weakness in the housing market. The National Association of Realtors said its pending home sales index fell 1.5 percent to a reading of 85.9 in December from a downwardly revised reading of 87.2 in November. Economists had been expecting a more modest decrease of about 1.0 percent.

Dollar Rockets Higher Versus Other Majors After BOE Cuts, ECB Holds Steady [EUR/USD]

Dollar Rockets Higher Versus Other Majors After BOE Cuts, ECB Holds Steady [EUR/USD]

Thursday, February 07, 2008 3:01:40 PM - The dollar gained ground against other major currencies on Thursday after the Bank of England cut interest rates and as the European Central Bank left its key rate unchanged.The European Central Bank kept its key lending rate at a six-year high of 4 percent Thursday morning, as expected. In his press conference accompanying the rate decision, ECB President Jean-Claude Trichet said the decision was unanimous and reflected concerns about the upside risk for inflation.However, Trichet may have softened his hawkish tone in conceding that incoming data has confirmed the risks for Euro zone economic activity are to the downside.The Bank of England cut its key lending rate by a quarter point to 5.25 percent. The central bank said its Monetary Policy Committee judged that a 25 basis point cut was necessary to meet the 2 percent target for CPI inflation in the medium term.Traders also considered data showing pending home sales fell more than economists had been expecting in the month of December.The National Association of Realtors said its pending home sales index fell 1.5 percent to a reading of 85.9 in December from a downwardly revised reading of 87.2 in November. Economists had been expecting a more modest decrease of about 1.0 percent.The Department of Labor released its report on US initial jobless claims in the week ended February 2, showing that jobless claims fell by less than economists had been expecting compared to a two year high in the previous week. The dollar soared to a fresh 2-week high versus the euro, climbing more than 2 cents to 1.4438 by mid-afternoon. The dollar extended its week-long uptrend against the euro and moved away from November's record low of 1.4947, last challenged a week ago.The greenback also gained significant ground against the sterling, jumping 2 cents to a 2 1/2 week high of 1.9386. The dollar has been trending higher versus the sterling of late on speculation the Bank of England will further lower interest rates.Versus the yen, the dollar raced higher in afternoon dealing, reaching a 2-week peak of 107.82 before paring its gains to fetch 107.35 approaching 3 pm ET.