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Traders looked ahead to Friday's jobs report. Bernanke and top Wall Street execs defended the Bear Stearns bailout before a Senate committee
Stocks ended narrowly higher Thursday after recovering from weak economic news showing an unexpectedly high number of Americans applied for unemployment benefits last week, a trend that raises worries about Friday's crucial March jobs report.
But most of Wall Street's attention Thursday was trained on Washington, where top regulators and Wall Street executives defended the bailout of Bear Stearns (BSC).
At a Senate Banking Committee hearing, senators questioned whether the Fed's bailout was appropriate, but Federal Reserve Chairman Ben Bernanke said Bear's collapse would have led to a "chaotic unwinding" of its investments. "Moreover, the adverse impact of a default would not have been confined to the financial system but would have been felt broadly in the real economy," Bernanke said.
Also testifying were Bear Stearns chief executive Alan Schwartz, Securities and Exchange Commission chairman Christopher Cox and Jamie Dimon, chief executive of JPMorgan Chase (JPM), which stepped in to buy the collapsing Bear Stearns at the government's urging.
U.S. jobless claims jumped 38,000 last week to 407,000 in the week ended Mar. 29, from 369,000 the week before. "The data will add fuel to concerns the economy is in recession," Action Economics says. Bear Stearns economist John Ryding said "a jobless claims reading above 400,000, if sustained, is a very strong indicator that the economy has fallen into recession."
Stocks fell Thursday morning, but clawed their way back to finish in positive territory. The Dow Jones industrial average was up 21.01 points, or 0.17%, at 12,626.84. The broader S&P 500 index added 1.55 points, or 0.11%, to 1,369.08. The tech-heavy Nasdaq composite index edged up 1.9 points, or 0.08%, to 2,363.30.
On the New York Stock Exchange, 18 stocks moved higher for every 13 declining in price. The ratio was 15 to 14 negative on the Nasdaq.
In NYMEX trading, May WTI crude oil futures fell 61 cents per barrel to $104.22.
In other economic news Thursday, the ISM nonmanufacturing index rose slightly from 49.3 in February to 49.6 in March. The report "is consistent with our view that the economy has decidedly slowed and has likely fallen into only a mild recession," with manufacturing and construction hit harder than services, said Michelle Meyer of Lehman Brothers (LEH).
Among stocks in the news Thursday, Research in Motion (RIMM) posted earnings of 72 cents per share, vs. 33 cents a year ago as revenue was sharply higher. The firm expects earnings of 82 to 86 cents per share next quarter, and revenue of $2.23 to $2.3 billion. Analysts at Standard & Poor's and Morgan Keegan raised their estimates, and S&P raised its target price.
Schering-Plough Corp. (SGP) announced a plan to slash costs by $1.5 billion. About 10% of the firm's workforce, or 5,500 employees, will lose their jobs, the Wall Street Journal reported.
La-Z-Boy (LZB) will shut down a Utah plant and consolidate all its domestic cutting and sewing operations in Mexico. The struggling furniture company will take a restructuring charge of $17 to $20 million, which works out to 20 ro 24 cents per share.
Micron Technology (MU) reported a loss of $1.01 per share, vs. a 7-cent loss a year ago, as sales fell 4.8%. The results include a non-cash charge of $463 million.
KKR Financial Holdings (KFN), hurt by subprime exposure, will raise $355.5 million from an offering of 30 million shares of stock. The offering is expected to close on Apr. 8.
Cisco Systems (CSCO) was downgraded from buy to neutral by analysts at UBS Financial.
Taser International (TASR) said the Sports Authority will carry its "C2 Personal Protector" product at selected stores.
European markets fell Thursday. In London, the FTSE 100 index dropped 0.42% to 5,891.30. In Paris, the CAC 40 index lost 0.49% to 4,887.87. Germany's DAX index lost 0.53% to 6,741.72.
Asian markets moved higher. Japan's Nikkei 225 added 1.52% to 13,389.90. In Hong Kong, the Hang Seng index rose 1.64% to 24,264.63.
Treasury price rose slightly Thursday. The two-year notes were flat at 99-22/32 for a yield of 1.912%, but the ten-year Treasury was up 03/32 to 99-09/32 for a yield of 3.591%; and the 30-year bond rose 11/32 to 99-27/32 for a yield of 4.389%.