On Wednesday, the Dow Jones industrial average finished higher by 11.77 points, or 0.13%, at 8,793.12. The broader Standard & Poor's 500 index increased 1.74 points, or 0.18%, at 953.22, which is near its 52-week high set in August 2002. The technology-laced Nasdaq composite index gained 6.55 points, or 0.42%, at 1,563.24.
Manufacturing news continues to be lackluster, according to an April update on durable goods orders, which showed a fall of 2.4%, or 1.2% excluding transportation. Weakness was broadbased, says economic research outfit MMS International, though the equipment sector showed strength.
"Both orders and shipments for nondefense capital goods now have positive trajectories in place as we enter the second quarter." MMS expects a 7% to 8% growth rate for real equipment and software spending in the quarter following the 4.4% rate of decline in the first quarter.
The stock market seems to be focused on the more positive signs of economic rebound. On Tuesday, home sales and consumer confidence were both upbeat.
Investors also saw a modest rebound in the dollar, which had hit record lows against the euro and the yen in recent sessions, as a reason to buy.
The 2003 tax stimulus package is another reason investors are hopeful. "It is at the discretion of the Bush Administration to steer the near-term impact on the economy," says Michael Englund, chief economist at MMS. Bush can guide the recovery by the size and timing of the tax rebate program, Englund says.
Thursday will bring more economic updates. A preliminary read on first-quarter gross domestic product is due. Economists expect a rise of 1.8%.
Weekly jobless claims will offer a read on the health of the labor market. Economists expect claims to fall slightly to 425,000. This would be the fifteenth consecutive week that claims have held above the 400,000 level, a performance not rivaled since 1992, says MMS.
Solid earnings news Wednesday helped lift markets. On Wednesday, discount club Costco Wholesale (COST
) reported an 18% rise in fiscal third-quarter earnings to $153.8 million, or 33 cents per share, on solid sales.
Krispy Kreme Doughnuts (KKD
) reported quarterly earnings increased nearly 50% as the company opened new stores. Income rose to $13.1 million, or 22 cents per share, up from $8.9 million a year earlier. Sales were up 34% to $148.7 million.
Home builder Toll Brothers (TOL
) said fiscal second quarter income inched up to $52.9 million, or 72 cents a share, on a 10% rise in sales.
On Thursday, investors will get several earnings updates from retailers including Chico's FAS (CHS
), Michaels Stores (MIK
), and Dollar General (DG
U.S Treasuries finished mostly lower in price Wednesday despite news that durable goods orders sank more than forecast. Upward momentum in stocks kept Treasuries under pressure, says MMS.
Data on April personal income and spending figures and the Chicago Purchasing Managers Index for May are also due Thursday. The final reading of the University of Michigan's May consumer sentiment index is due Friday.
European markets finished higher. In London, the Financial Times-Stock Exchange 100 index rose 79.50 points, or 1.99%, to 4,071.90. In Germany, the DAX Index added 45.94 points, or 1.60%, to 2,919.54, amid speculation the European Central Bank will cut rates at next week's policy meeting. In France, the CAC 40 gained 58.14 points, or 2.01%, to 2,949.61.
In Asia, markets ended higher. Japan's Nikkei index gained 113.94 points, or 1.4%, to 8,234.18. High-tech companies and exporters rose, but bank stocks lacked a clear direction. Prime Minister Koizumi said that President Bush told him U.S. was supporting a strong U.S. dollar.
In Hong Kong, the Hang Seng index rose 89.81 points, or 0.95%, to 9,510.62.