Stocks surged in late trading Thursday as a dip in oil prices spurred buying ahead of a business update from tech bellwether Intel (INTC), the blue-chip semiconductor company, after the close of trading.
The Dow Jones industrial average added 121.82 points, or 1.2%, to 10,290.28. The broader Standard & Poor's 500 index was up 12.4 points, or 1.12%, to 1,118.31. The Nasdaq composite index gained 23.02 points, or 1.24%, to 1,873.43.
Looking ahead to Friday, investors will be weighing the details of a mid-quarter update from Intel Thursday evening. The chipmaker, citing weaker demand, expects revenue for the third quarter to be between $8.3 billion and $8.6 billion, vs. the previous range of $8.6 billion to $9.2 billion. It expects third-quarter gross margin to be approximately 58%, vs. the previous expectation of around 60%. The shares were solidly lower in after-hours trading Thursday.
The August employment report, the week's biggest economic highlight, is due Friday before the market open. Economists expect on average 150,000 new non-farming jobs in the month while the unemployment rate should remain steady at 5.5%.
Among earnings reports up for review Friday are Mandalay Resort Group (MBG) and Pall (PLL), which are both reporting after Thursday's close.
On Thursday, a decline in crude-oil futures to near $44 a barrel on the New York Mercantile Exchange helped lift the market. Earlier prices were above $45, on reports that Russia's troubled oil group Yukos may have to halt production as the government seeks to seize $2.6 billion from the accounts of Yukos subsidiaries. A pipeline fire in Iraq was said to interrupt pumping to a Turkish port until further notice.
The market's late-day rally Thursday came despite the latest economic and retail sales data, which painted a disappointing picture for August. Sales at retailers, particularly large, price-focused chains, fell short of analysts' hopes.
Wal-Mart (WMT) posted a slim 0.5% increase in same-store sales, missing Wall Street forecasts for a 1.5% gain. Costco Wholesale (COST) reported a 4% gain in same-store sales, missing analysts' expectation of a 7.3% rise.
There were pockets of retail strength, however. American Eagle Outfitters (AEOS) reported a 23.9% jump in same-store sales, well above the 13.9% consensus expectation. Luxury department store Neiman Marcus (NMG.A) reported comparable-store sales increased 17.2%.
First-time jobless claims for the week ended Aug. 28, rose by 19,000 to 362,000, from an unrevised 343,000 in the previous week. The number was higher than the 340,000 that economists had been expecting.
Still, the rise may be somewhat misleading. "The data was a poor proxy for payrolls due to the effects of Hurricane Charley boosting claims," says economic research group Action Economics.
In other economic data, a Labor Dept. report showed that workers' productivity increased at an annual rate of 2.5% in the second quarter, the smallest gain since late 2002. This marks a deceleration from the 3.7% pace posted in the first three months of the year.
"The slowing likely reflects a rebound in business confidence and renewed hiring and can be viewed as a positive cyclical development," according to economists at UBS.
A report showed factory orders in July rose 1.3%. Analysts had expected a rise of 1.1%.
In other stocks news, Del Monte Foods (DLM) posted 41% lower quarterly profit, blaming costs associated with integrating brands acquired from H.J. Heinz Co. in 2002 and higher commodity costs.
Telecom equipment outfit Nortel Networks (NT), which has been embroiled in an accounting scandal, announced it is delaying its restatement of 2003 earnings by another month until October.
U.S. Treasury prices fell while the yield on the benchmark 10-year note rose to 4.19%.
The market is still expecting a quarter point rate hike later this month, so "Friday's [jobs] data would have to underperform significantly to knock the FOMC off its current path," says Action Economics. Disappointing jobs data would support views the Fed will stop raising rates in either November or December.
European stock markets finished higher Thursday after a central bank decision to leave interest rates unchanged. The Financial Times-Stock Exchange 100 index in London added 16.6 points, or 0.37%, to 4,518.6, on strength in oil stocks and gains in Sainsbury.
Germany's DAX index was up 15.83 points, or 0.41%, to 3,833.45. In Paris, the CAC 40 index was up 20.15 points, or 0.56%, to 3,633.38.
Asian markets finished mixed. Japan's Nikkei 225 index added 25.4 points, or 0.23%, to close at 11,152.75 on strength in tech stocks. In Hong Kong, the Hang Seng index lost 24.8 points, or 0.19%, to close at 12,999.07.