A jump in the Philly Fed index Thursday offset a rise in jobless claims. Friday's watch list: July existing home sales and Bernanke's Jackson Hole speech
U.S. stocks closed higher for a third straight session Thursday, as Monday's 186-point drop in the Dow industrials continued to fuel bargain hunting, despite mixed economic news. Financial, basic materials, and industrial stocks were solid performers.
The Philadelphia Fed index rose to 4.2 in August from -7.5 in July. The news appeared to counter a disappointing read on weekly initial jobless claims, which rose 15,000 to 576,000 while continuing claims rose 2,000 to 6,241,000.
Also Thursday, the Conference Board's July index of leading economic indicators rose 0.6% after rising 0.8% in June.
On Thursday, the 30-stock Dow Jones industrial average finished higher by 70.89 points, or 0.76%, at 9,350.05. The broad Standard & Poor's 500-stock index added 10.91 points, or 1.09%, to 1,007.37. The tech-heavy Nasdaq composite index gained 19.98 points, or 1.01%, to 1,989.22.
Treasuries climbed. Oil futures were mixed. The dollar and gold fell.
Key events to watch in Friday's session: Federal Reserve Chairman Ben Bernanke's speech at the Kansas City Fed's annual Jackson Hole, Wyo., gathering; and the release of a report on existing home sales for July.
Standard & Poor's strategists believe the market already incorporates stabilizing of most economic data points; investors may now require evidence of real economic growth.
The volatile Shanghai composite stock index, which plunged Wednesday, rallied 4.52% Thursday as traders reassessed perceptions about China's economic strength.
Shares of American International Group (AIG) climbed Thursday. According to a note from Standard & Poor's, the rise in AIG shares was tied to a Reuters report which quoted AIG's new CEO as saying the company would be able to pay back the government and "we hope we will be able to do something for our shareholders as well."
Google (GOOG) shares advanced Thursday after Goldman Sachs predicted accelerating sales growth for the Web search leader. Goldman added Google to its "Conviction Buy" list in a note to investors late Wednesday.
The Obama administration will trim its budget deficit forecast for fiscal 2009 to $1.58 trillion, after scrapping money earmarked for bailing out more banks, officials said. Reuters reporte the record deficit has made investors anxious and threatens to thwart Obama's ambitious domestic agenda to overhaul healthcare, reform education and make the country less reliant on fossil fuels. Polls show the deficit is one of the top concerns of Americans who fear that it could lead to higher taxes. An administration official said the drop in the projected deficit was due to the elimination of $250 billion that had been set aside for further possible financial rescues.
The White House is developing plans to wind down the popular Cash for Clunkers program and could announce by today when the incentives will no longer be available. Transportation Secretary Ray LaHood said the department would announce within 48 hours how it intends to discontinue the program that offers car buyers rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models. Department officials met with car dealer trade groups on Wednesday to discuss how the program will eventually end and respond to complaints over a backlog of rebate payments to dealers. Through early Wednesday, auto dealers have made deals worth $1.81 billion and are on pace to exhaust the program's $3 billion in funds in early September.
In company news Thursday, Sears Holdings (SHLD) reported a third quarter loss of $0.79 per share, vs. earnings per share (EPS) of $0.50 one year earlier. The company noted that domestic same-store sales declined 8.6% in aggregate, with Sears Domestic same-store sales declining 12.5% and Kmart same-store sales declining 3.9%; total revenue dropped 10%.
PetSmart (PETM) reported second-quarter EPS of $0.31, vs. $0.30, on slightly higher same-store sales and 5.4% higher total sales. The company sees third-quarter EPS of $0.20-$0.24 on flat same-store sales,and fiscal 2010 EPS of $1.37-$1.45 on low single digits growth in same-store sales. Wall Street was looking for fiscal 2010 EPS of $1.52.
Limited Brands (LTD) reported adjusted second-quarter EPS of $0.19, vs. 0.27, on 9% lower same-store sales and 9.5% lower net sales. The company sees a third-quarter loss per share of $0.07-$0.12. For fiscal 2010, it forecasts $0.75-$0.90 adjusted EPS.
H.J. Heinz (HNZ) posted first-quarter EPS of $0.67, vs. $0.72, EPS on a 4.5% sales drop. Wall Street was looking for EPS of $0.62. Based on its first-quarter performance, Heinz sees fiscal 2010 sales growth of 4%-6%, with EPS growth of 5%-8%.
JDS Uniphase (JDSU) posted a fourth-quarter non-GAAP loss per share of $0.01, vs. $0.07 EPS, on a 29% revenue decline. The company sees first-quarter revenue of $283 million-$300 million.
In economic news Thursday, U.S. jobless claims jumped to 576,000 in the week ended Aug. 15 (economists' median forecast was for a decline of 550,000) from a revised 561,000 level in the prior week (from 558,000). The four week average rose to 570,000, from 565,750 previously. And continued claims rose to 6,241,000, also above expectations, from 6,239,000 million.
The British Office for National Statistics said retail sales rose 0.4% in July, taking the annual rate to a gain of 3.3% -- its highest since May 2008.
The German economy could perform much better in the third quarter than in the second as the impact of local and global stimulus measures strengthens, the Bundesbank said in a monthly report.