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Stocks finished higher Thursday, rebounding from early losses as hopes for a Mideast peace resolution overcame disappointing corporate earnings. A closely watched employment report out Friday could add to confusion over whether the Federal Reserve will hike rates at its Aug. 8 meeting, says Standard & Poor's Equity Research.
The Dow Jones industrial average rose 42.66 points, or 0.38%, to 11,242.59, paced by Caterpillar (CAT
). The broader Standard & Poor's 500 index added 1.72 points, or 0.13%, to 1,280.27. The tech-heavy Nasdaq composite climbed 13.53 points, or 0.65%, to 2,092.34.
NYSE breadth was positive, with 20 issues advancing for every 13 declining, while Nasdaq breadth was 17-12 positive.
The market's volatility may continue for the rest of the summer, some analysts say. "Various factors may be coming together, supporting a late-year rally, but summer choppiness most likely will persist," says Tobias Levkovich, chief U.S. equity strategist at Citigroup.
Optimism grew for a Mideast ceasefire Thursday. U.K. Prime Minister Tony Blair said he was hopeful a United Nations resolution could be reached "within the next few days." A U.S. State Department official indicated a goal of Friday to halt the fighting between Israel and Hezbollah.
Friday's payrolls report and the Fed's Aug. 8 meeting also loomed. Jobless claims rose 14,000 to 315,000 in the week ended July 29, slightly more than expected. The Institute for Supply Management's non-manufacturing index of business activity unexpectedly fell to 54.8 in July from 57.0 in June. Factory goods orders increased 1.2% in June.
In earnings news, Ford (F
) was lower after the automaker said its second-quarter loss was more than double what it previously announced, due to unexpectedly high pension costs.
Meanwhile, Tyco (TYC
) was also lower after the conglomerate reported a 17% drop in quarterly earnings on higher copper prices and stock option expenses.
Coffee retailer Starbucks (SBUX
) was down after the company said July sales rose 4%, below expectations for 7% sales growth.
Shares of Medtronic (MDT
) tumbled after the medical device maker posted fiscal first-quarter results that fell below Street forecasts.
Wireless carrier Sprint Nextel (S
) was sharply lower following a 38% drop in second-quarter profit.
Companies reporting quarterly results Friday include Goodyear Tire & Rubber (GT
), Occidental Petroleum (OXY
), and Peoples Energy (PGL
Also in focus Thursday, retailers turned in firm July sales figures. Stores beating analyst expectations included Wal-Mart (WMT
), Costco (COST
), Limited Brands (LTD
), and Nordstrom (JWN
), while Gap (GPS
) and Target (TGT
) were among companies lagging.
In the energy markets, September West Texas Intermediate crude oil futures closed down 35 cents at $75.46 a barrel as hurricane worries subsided.
European markets finished lower. In London, the Financial Times-Stock Exchange 100 index dipped 93.7 points, or 1.58%, to 5,838.4. Germany's DAX index lost 40.79 points, or 0.72%, to 5,640.03. In Paris, the CAC 40 index was down 42.57 points, or 0.85%, to 4,983.68.
Asian markets finished narrowly mixed. Japan's Nikkei 225 index nudged up 6.08 points, or 0.04%, to 15,470.37. In Hong Kong, the Hang Seng index advanced 15.67 points, or 0.09%, to 17,048.42. Korea's Kospi index slipped 3.06 points, or 0.24%, to 1,292.05.
Treasury yields ticked lower in the wake of the mixed economic data, after rising initially following interest-rate hikes by the Bank of England and the European Central Bank. The 10-year note edged up in price to 101-10/32 for a yield of 4.95%, while the 30-year bond rose to 91-25/32 for a yield of 5.04%.