Markets & Finance

Blue Chips Extend Rally, But Nasdaq Stalls


Stocks ended mixed Thursday, as the broader market advanced in a carryover of Wednesday's buying momentum that lifted the major averages off 4-year lows. The tech-heavy Nasdaq index, though, faltered and closed nearly unchanged amid weakness in networking and semiconductor shares.

The Dow Jones industrial average gained momentum and surged 155.30 points, or 1.98%, to 7,997.12. The Nasdaq composite index slipped 0.67 of a point, or 0.05%, to 1,221.62. The broader Standard & Poor's 500-stock index added 15.29 points, or 1.82%, to 854.95.

Sentiment was buoyed by a report that the housing sector remains strong. U.S. new home sales rose 1.9% to a record 996,000 annual pace in August after a big downward revision to July to 977,000 (from 1,017,000 previously). The data reflect ongoing demand for homes given historically low mortgage rates, notes economic research firm MMS International.

Meanwhile, the U.S. 30-year fixed mortgage rate hit a fresh low last week, spurring near-record numbers of applications to refinance home loans, a trade group reported on Wednesday, according to wire-service reports.

In another report released Thursday, weaker military demand pushed U.S. durable goods orders down in August. But the drop was smaller than expected and a rise in capital goods orders offered a glimmer of hope a long-lasting business investment slump may be nearing an end, according to wire-service reports. Orders for durable goods -- costly manufactured items intended to last at least three years -- fell 0.6% last month after a downwardly revised 8.6% rise in July, according to the Commerce Dept.

Among the stocks in the news, the finance chief at Dow component General Electric (GE) detailed $325 million in third-quarter losses from the conglomerate's insurance and equity units, but said an after-tax gain of $300 million from the sale of its GXS unit would help meet earnings estimates after encountering a "much tougher" environment than expected, according to press reports.

In other corporate news, home furnishings retailer Bed, Bath & Beyond (BBBY) posted second-quarter earnings per share of 25 cents vs. 18 cents a year earlier, on an 8% rise in same store sales and a 27% increase in total sales.

Treasury Market

U.S. Treasuries remained lower, amid strength in equities, though they had pared most of their losses as the session wound down. The better-than-expected report on August new home sales also weighed on the market.

In other economic news, initial jobless claims plunged 24,000 to the 406,000 level in the week ended Sept. 21 from an upwardly revised 430,000 level in the previous week. The large drop in the headline number helped keep Treasuries under pressure while bolstering stocks and the dollar, says MMS International.

World Markets

European markets closed higher, following U.S. equities' gains. In London, the Financial Times-Stock Exchange 100 index climbed 154.40 points, or 4.18%, to 3,850.60. The rising U.S. market overshadowed a report that Britain's second-quarter business investment has hit its lowest level since 1997, according to S&P.

In France, the CAC 40 surged 176.08 points, or 6.32%, to 2,961.46, even though French business confidence dropped in September. And in Germany, the DAX Index was higher by 58.10 points, or 1.96%, to 3,020.60.

In Asia, the markets finished with gains. The Nikkei climbed 1555.51 points, or 1.70%, to 9,320.92, taking a cue from the rebound in U.S. equities. Speculation the Japanese government would step up its measures against non-performing loan problems and deflationary pressures also boosted the market.

In Hong Kong, the market added 145.80 points, or 1.60%, to 9,270.71.


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