Stocks Edge Up Despite Oil Price Jump

Investors found comfort in merger news and an unexpected bump up in fourth-quarter economic growth, while crude oil spiked to $66

Stocks managed to finish higher in a see-saw session Thursday despite a spike in oil prices as Iran bickers with Britain over hostages. A report showed economic growth was unexectedly revised higher for the fourth quarter, and there was some merger news. S&P reports that the market could be volatile as traders square positions at the end of the month and quarter.

The Dow Jones industrial average rose 48.39 points, or 0.39%, to 12,348.75. The broader Standard & Poor's 500 index was up 5.3 points, or 0.37%, to 1,422.53. The tech-heavy Nasdaq composite inched up 0.78 point, or 0.03%, to 2,417.88, held back by earnings warnings.

In the energy markets, May NYMEX crude oil spiked $2 to $66.08 a barrel amid political tensions with Iran. There was news of a third U.S. navy carrier group about to head out to the Persian Gulf, and British hostages were still apparently no closer to being released, says Action Economics.

Looking ahead to Friday, there are a bunch of economic reports being released. February construction spending is expected to fall 0.6%. Action Economics expects a similar tone to what has been seen in recent months, with weakness in residential, while non-residential and public construction remain firm.

The March Chicago-PMI is expected to rebound to 49.0 from February's weaker-than-expected level of 47.9 -- the lowest reading since November of 2002.

The final reading for March Michigan sentiment is expected to dip to 88.2 from the preliminary reading, amid falling stock prices, rising gasoline prices, and negative news related to sub-prime mortgage problems.

February personal income is expected to increase median 0.4%, while consumption rises by 0.3%.

In economic news Thursday, final U.S. fourth-quarter GDP growth revealed an unexpected bump to 2.5% from 2.2% due mostly to a $5 billion boost to inventories, as well as an unexpected upward bump to service consumption, and a downward import adjustment. "We continue to believe that the economy is downshifted from the 3.7% growth rate through the thirteen high growth quarters ending in the second quarter of last year to a new lower pace in the 3%-3.5% area, but with a notable under-shoot of growth to the 2% area in recent quarters as the housing jolt and inventory adjustments work their way through the economy," says Action Economics.

U.S. jobless claims fell 10,000 to 308,000 in the week ended Mar. 24. The 4-week moving average slid to 316,750 from 324,000, and is down from elevated February levels which were weather impacted to a large extent.

In deal news, U.S. Steel (X) agreed to acquire Lone Star Technologies (LSS) for $67.50 per share, in a deal valued at about $2.1 billion. U.S. Steel expects the transaction to add to earnings this year.

BCE Inc. (BCE) was up on an unconfirmed report that there is interest from a U.S. private equity firm to purchase the company.

UTI Worldwide (UTIW) slumped after the company posted lower-than-expected fourth-quarter earnings. S&P cut its price target and kept a hold opinion, while Stephens downgraded the stock to equal-weight.

There were a couple of earnings warnings. ATMI Inc. (ATMI) cut its $84-$88 million first quarter revenue guidance to $80-$84 millioin, and 28-32 cents EPS to 17-21 cents. It notes its packaging business is experiencing a shortfall.

RF Micro Devices (RFMD) says looking at the first quarter, it expects a slowdown in demand from a top tier customer that will impact operating results. It reconfirms fourth-quarter and fiscal year 2007 guidance. Jefferies cut the stock to hold.

Multi-Fineline Electronix (MFLX) skidded after the company expects second-quarter net sales to decline sequentially, and says net income may decline as well, rather than rise, because of less-than-expected sales to its largest customer.

European stock markets moved higher. In London, the FTSE-100 index rose 57 points, or 0.91%, to 6,324.2. Germany's DAX index climbed 80.19 points, or 1.18%, to 6,897.08. In Paris, the CAC 40 index was up 78.84 points, or 1.42%, to 5,631.53.

Asian markets finished higher Thursday. In Japan, the Nikkei 225 index edged up 9.21 points, or 0.05% to 17,263.94. In Hong Kong, the Hang Seng index climbed 267.91 points, or 1.37%, to 19,821.78.

Treasury Market

A surprise boost to final fourth-quarter GDP knocked Treasuries lower and drove yields back to over 1-month highs in combination with a drop in jobless claims coming just ahead of next week's payrolls report, says Action Economics. The 10-year yield rose to 4.63%.