Stocks finished mixed, with Dow stocks paring back losses and tech stocks ending on positive turf as the latest solid economic data offset mediocre earnings guidance from IBM (IBM) and Caterpillar (CAT).
The Dow Jones industrial average finished down 11.33 points, or 0.12%, to 9,791.72. The broader Standard & Poor's 500 index rose 3.31 points, or 0.32%, to 1,050.07. The tech-heavy Nasdaq composite index was up 11.04 points, or 0.57%, to 1,950.14.
On Friday, investors will be mulling results from United Technologies (UTX), which reported earnings after Thursday's close. The maker of Sikorsky helicopters, Pratt & Whitney jet engines and Otis Elevators earned $639 million, or $1.27 per share, in the three-month period that ended Sept. 30, beating analyst estimates.
eBay (EBAY) shares were under pressure after Thursday's close when it released earnings that met the low end of its guidance. Still, earnings came in at $103.3 million, or 16 cents per diluted share, compared with its year-earlier profit of $61 million, or 11 cents per diluted share. Revenues rose to $530.9 million from $288.8 million.
Others on the earnings docket Thursday evening include Broadcom (BRCM), Rambus (RMBS), Stryker (SYK),Advanced Micro Devices (AMD), Sun Microsystems (SUNW), and Fairchild Semiconductor (FCS),
More data are due Friday -- on September housing starts and University of Michigan consumer sentiment.
Strong economic reports Thursday helped relieve pressure from lackluster company guidance. Investors got some more positive signs from the housing sector. The NAHB index jumped to 72 in October from 68 in September, the highest level since December, 1999. Strength was broadbased, but paced by the current outlook which rose to 79 from 73. Expectations for future sales was up 4 to 82. The index of buyer traffic rose to 53 from 51.
In earnings news Thursday, IBM announced earnings of $1.02 per share and revenues of $21.5 billion, matching expectations. CEO Sam Palmisano said he saw signs of economic stabilization and expects an pick-up in information technology spending, though he did not call for a full rebound. He also signaled IBM would be hiring for some 10,000 new positions. Shares were down 4% Thursday.
Caterpillar was another disappointment. It raised its earnings per share, but the stock still stumbled as its third quarter and full-year guidance fell short of analysts' bullish forecasts.
Other companies releasing earnings Thursday include Dow component Coca-Cola (KO). The beverage giant said profits rose, amid solid demand in European, with demand there up 9%.
Ford (F) reported better than expected earnings of $0.15 a share, while analysts expected a loss. The company expects a small profit or breakeven for the year.
Wireless handset giant Nokia (NOK) reported flat third-quarter earnings, citing tough competition and pressure from a weak dollar. Nokia forecasted lower fourth-quarter earnings.
Honeywell (NOK), another member of the Dow industrials, reported third-quarter earnings of a fall in net income decreased to $344 million -- in line with analysts' estimates.
Treasuries began Thursday's session with gains on initial stock weakness, but soon foundered on a brace of stronger than expected data that brought forward Fed tightening expectations.
A report on the Philly Fed manufacturing index showed a jump to 28.0 in October from 14.6 in September, consistent with the spike in the Empire State index Wednesday, says MMS. Strength was broadbased with employment gauges up significantly. New orders surged to 29.0 from 19.3. Prices fell to 22.3 from 22.5. The data should weigh on Treasuries but give the dollar and stocks a lift.
Initial jobless claims in the week ending October 11, fell 4,000 to 384,000 compared to an upwardly revised 388,000 level in the previous week. The decline in claims pulled the four week moving average down 4,000 to 391,000, which is the lowest level since February of this year. Continuing claims rose 58,000 to the 3.67 million level in the week ended Oct. 4.
In September, the consumer price index rose 0.3% -- 0.1% excluding food and energy -- following identical gains in August. A 3.0% surge in energy as a result of a 6.3% rise in gas prices pushed the index higher. On a year over year basis, CPI is up 2.3% and the core is up a tepid 1.2%. The data are consistent with a tame outlook for inflation, says MMS International, an economic research outfit.
U.S. business inventories fell 0.4% in August compared to a downwardly revised 0.2% dip in July, much lower than consensus estimates of a 0.1% decline. Business sales fell 0.2% compared to a 1.7% gain in July. This left the inventory/sales ratio at a low 1.36 months worth. The results bode well for restocking going forward, says MMS.
In other economic news, the U.S. industrial production figures fell short of MMS' optimistic forecast because of unforseen weakness in the utility sector, but still show a steady and sizable rebound in the factory data. The figures now reveal 3.2% growth in the third quarter that nearly offsets the 3.7% pace of contraction in second quarter, and the economy is poised for 5% growth in the fourth quarter, given the solid trajectory.
Fedspeak also played a central role Thursday, notes MMS, with San Francisco Fed president Parry recanting his June dissent in favor of a deeper rate cut then and expressing optimism about the recovery. Parry also said that "accommodative" policy doesn't mean the Fed will hold rates flat.
European stocks finished mixed Thursday. London's Financial Times-Stock Exchange 100 index fell 29.10 points, or 0.67%, to 4,330.70, amid a BCC manufacturing report showed export sales and orders declined in the third quarter.
Germany's DAX index turned higher by 7.27 points, or 0.20%, to 3,577.85. Commerzbank rose with some help from Lehman Brothers increasing its rating on the stock.
In Paris, the CAC 40 shed 17.49 points, or 0.52%, to 3,357.49.
Asian stocks finished mixed. Japan's Nikkei 225 index surged 125.20 points, or 1.15%, to finish at 11,025.15, as the dollar-yen rose to a high-109 overnight, supporting exporters and high-techs. In Hong Kong, the Hang Seng index shed 28.61 points, or 0.24%, to 12,027.57.