Major U.S. stock indexes closed higher Thursday as a late-day buying spree catapulted the market out of an earlier slump. Wall Street was pondering a flood of earnings reports for some signs the economy will improve in the second half of the year.
Thursday's session was highlighted by bargain hunting in the financial sector. Among financials that rose were Bank of America (BAC), JPMorgan Chase & Co. (JPM), and American Express () AXP. Meanwhile, Citigroup (C) and Morgan Stanley (MS) fell.
There was some disappointment in the market over a report Thursday that weekly initial jobless claims rose 27,000 to 640,000, while continuing claims rose to a record 6,137,000. Existing home sales fell 3.0% to a 4.57 million rate in March from a 4.72 million pace in February, and prices fell 3.0%.
On Thursday, the 30-stock Dow Jones industrial average finished higher by 70.49 points, or 0.89%, at 7,957.06. The broad S&P 500 index moved up 8.37 points, or 0.99%, to 851.92. The tech-heavy Nasdaq composite index gained 6.09 points, or 0.37%, to 1,652.21. On the New York Stock Exchange, 18 stocks were higher in price for every 12 that declined. Nasdaq breadth was 17-10 negative. Trading was moderate.
Treasuries edged higher. The dollar index fell. Gold and crude oil futures rose.
Big tech names were in the spotlight in Thursday's session. eBay posted better-than-expected first-quarter earnings per share of $0.39, vs. $0.42 one year earlier, on an 8% revenue decline. Wall Street was looking for EPS of $0.33. eBay sees second-quarter revenue of $1.85 billion-$2.05 billion and non-GAAP EPS of $0.34-$0.36.
Apple reported second-quarter EPS of $1.33, vs. $1.16, on an 8.7% revenue rise and a widened gross margin. Wall Street was looking for EPS of $1.09. Apple said it has almost $29 billion in cash and marketable securities on its balance sheet. The company sees third-quarter revenue of about $7.7 billion-$7.9 billion and EPS of $0.95-$1.00.
Qualcomm (QCOM) announced that it has rescheduled its second-quarter earnings call to Monday, April 27, 2009 at 5:00 a.m. PT, following release of its results at about 4:30 a.m. PT. The postponement was due to "advanced" settlement discussions with Broadcom (BCRM) regarding a global settlement of all disputes between the parties which, if reached, would have an impact on Qualcomm's financial results for the second quarter. The company said second-quarter revenue and operating income, excluding the potential impact of a Broadcom agreement, met or exceeded prior guidance.
In economic news Thursday, U.S. existing home sales fell 3.0% to a 4.57 million annualized rate in March, up from a 4.71 million rate in February. The reading was much weaker than the 4.7 expected by markets. The National Association or Realtors release said that distressed sales accounted for 50% of all sales, and that 51% of buyers were first time buyers. Sales were at a 4.94 million pace a year ago. Single family sales fell 2.8%, while condos/coops dropped 4.1%. Sales were down 8.1% in the Northeast and were down 4.2% in the West. The months' supply of unsold homes rose to 9.8 from a downwardly revised 9.7 months (previously 10.8). The median sales price rose to $175,200 from $168,200 in February (revised from $208,600) but is down 12.4% year-over-year.
U.S. jobless claims rose 27,000 to 640,000 in the week ended April 18, after reporting declines the prior two weeks and about as expected by markets. The Bureau of Labor Statistics noted much of the recent weakness was a function of faulty seasonal adjustments surrounding the movable Easter holiday. The 4-week moving average fell to 646,750 from 651,000. Continuing claims continue to surge, rising another 93,000 to 6,137,000 in the week ended April 11, the highest on record. The prior week this component topped 6 million, the first time ever in the history of the series.
"While coming in about as expected, the data continue to reflect a weak jobs market," says Standard & Poor's senior economist Beth Ann Bovino.
The Obama administration may direct banks judged to need capital after stress tests to disclose how they plan to get additional funds when the government reveals the results May 4, a person familiar with the matter said. Bloomberg News said officials are discussing a release that will show the assessments for each of the 19 biggest U.S. banks, said the person, who spoke on condition of anonymity because a decision hasn't been made. Lenders would specify whether they will issue new stock, seek a conversion of government preference shares, or rely on additional taxpayer funds, according to the person.
President Barack Obama will weigh in on the lending practices of U.S. credit card companies, an issue that has triggered an outcry from consumers hit with high fees and interest rates. Obama has joined a push by lawmakers to rein in credit card practices that his aides have labeled as "abusive" and plans to air some of his concerns at a White House meeting with 13 executives from top banks and companies that issue the cards.
In other earnings news Thursday, United Parcel Service (UPS) posted first-quarter adjusted EPS of $0.52, vs. $0.87, on 13% lower revenue. UPS cited the continuing deterioration in global economic activity. The company said economic indicators show that a recovery in the U.S. might begin late this year, but more likely not until 2010; as a result, it expects the second quarter to be another difficult one, and forecast $0.45-$0.55 EPS.
RadioShack (RSH) reported first-quarter EPS of $0.34, vs. $0.30, on a 5% rise in same-store sales for company-operated stores and kiosks and 5.6% total sales rise. Wall Street was looking for EPS $0.22.
CIT Group (CIT) posted a first-quarter loss per share from continuing operations of $1.30, vs. a $1.36 loss, as lower total expenses offset higher loan loss provisions and lower interest income. The company suspended its dividend.
SunTrust Banks (STI) reported a loss per share of $2.49, vs. $0.81 EPS, on flat revenues. The company noted a majority of the current-quarter loss was attributable to a non-cash, after-tax charge of $2.03 per share related to the impairment of goodwill, which had no impact on its strong regulatory capital and tangible equity ratios.
Marriott International (MAR) reported a first-quarter loss from continuing operations of $0.06, vs. $0.33 EPS, on 20% decline in revenue per available room for its worldwide company-operated hotels. Marriott expects second-quarter adjusted EPS from continuing operations to be within the $0.20-$0.23 range.