By Kristina Peterson
U.S. stocks posted modest gains Thursday as the consumer-staples
sector and some retailers' same-store sales managed to buoy the
market against losses in the technology sector.
An earlier rally fueled by a bigger-than-expected drop in
jobless claims faded slightly, as investors pulled back from the
technology stocks that jumped in Wednesday's trading.
The Dow Jones Industrial Average (DJI) recently rose by as much
as 49 points, or 0.5%, to 10,066. DuPont (DD) rose 1.8%, while
McDonald's (MCD) gained 1.7% and Boeing (BA) rose 1.4%.
Technology components lagged, with Intel (INTC) down 1% and
Cisco Systems (CSCO) off 0.8%.
The tech-stock-heavy Nasdaq Composite (RIXF) edged down 0.1% to
2,158. The Standard & Poor's 500-stock index (SPX) rose 0.2% to
1,062.
Consumer staples strengthened, boosted by strong June sales at
warehouse retailer Costco Wholesale (COST). Costco shares gained
2.1% after its June same-store sales rose 4%. Retailers oriented to
basic consumer needs also gained. Walgreen (WAG) rose 2.6%, while
General Mills (GIS) gained 1.5%.
"Frugality's still out there," said Christian Hviid, chief
market strategist at Genworth Financial Asset Management, noting
that weakness in the jobs market is likely still cutting into
spending. "It's a needs versus wants spending environment we're
back into."
In a more positive sign on Thursday, the Labor Department said
initial claims for jobless benefits declined by 21,000 to 454,000
in the week ended July 3, more than the 12,000 drop expected by
economists, though the previous week's level was revised upward, to
475,000, from 472,000.
"The market felt very negative with the last jobs report. This
takes the edge of the negativity off that, at least for today,"
said Benny Lorenzo, chairman and chief executive of Kaufman
Brothers.
Safe-haven assets declined as economic optimism strengthened.
The 10-year note (UST10Y) was recently down to yield 3.02%, its
first move above 3% since June 29. Crude-oil futures edged up above
$75 a barrel.
Retailers' June chain-store sales were mixed, with some stores
benefiting from aggressive promotions and others hurt by consumers'
continued restrained spending.
Abercrombie & Fitch (ANF) jumped 7.1% after same-store sales
rose 9%, above analysts' average estimate of 5.5% as the company
benefited from aggressive promotions. Limited Brands (LTD) gained
0.6% after its same-store sales rose 6%, nearly doubling
expectations for a rise of 3.2%.
The European Central Bank decided to keep its benchmark interest
rate unchanged, as did the Bank of England at its monthly meeting.
The euro was recently trading at $1.2653, up from $1.2642 late
Wednesday in New York.
Among stocks to watch, Goldman Sachs Group (GS) fell 1.7% after
Meredith Whitney cut her second-quarter earnings estimates for the
company, according to Bloomberg.
Wells Fargo (WFC) fell 0.8% after saying it will shut down a
unit that makes what the San Francisco-based bank calls "nonprime"
real estate, auto and credit card loans and stop originating
nonprime mortgages, eliminating a total of 3,800 jobs, or 1.4% of
its work force.