By Jonathan Cheng
Stocks surged into the close Thursday and appeared set to extend
the week's solid rally in the face of mixed data on jobs, retail
sales and consumer lending.
The Dow Jones Industrial Average (DJI) recently rose 104 points,
or 1.04%, to 10122. DuPont (DD) rose 2.6%, while McDonald's (MCD)
gained 2.2% and Boeing (BA) rose 1.7%.
Technology components lagged, with Intel (INTC) down 0.5% and
Cisco Systems (CSCO) off 0.5%. If the Dow can hold onto its gains,
it would put the blue-chip index on a three-day rebound after a
bruising pre-July 4 week amid lingering questions about the pace of
the global economy. On Tuesday and Wednesday, the Dow rose
3.4%.
The Nasdaq Composite (RIXF) was up 0.5% recently at 2171. The
Standard & Poor's 500-stock index (SPX) rose 0.7% to 1068.
Consumer staples strengthened, boosted by strong June sales at
warehouse retailer Costco Wholesale (COST). Costco shares gained
2.1% after it said its same-store sales rose 4%. Retailers oriented
to basic consumer needs also gained after the reports showed the
stores that did the best during June benefited from aggressive
promotions. Walgreen (WAG) rose 3.3%.
Abercrombie & Fitch (ANF) jumped 7% after same-store sales
rose 9%, above analysts' average estimate of 5.5% as the company
benefited from promotions. Limited Brands (LTD) gained 1.5% after
its same-store sales rose 6%, nearly doubling expectations for a
rise of 3.2%.
"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, 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 numbers were slightly better than expected, but these are
volatile one-week numbers," said Sal Arnuk, co-head of equity
trading at Chatham, N.J.-based brokerage Themis Trading LLC. "We
still have millions of Americans out of work...I just don't see the
real economy getting meaningfully better yet."
But numbers from the Federal Reserve late in the trading day
showed consumer credit falling in May for the fourth consecutive
month, a reflection of the thrifty times. Consumer credit
outstanding decreased at a seasonally adjusted annual rate of 4.5%,
down $9.1 billion to $2.415 trillion, according to the report, far
outstripping the $2.0 billion decline that economists had been
expecting.
"There is simply no way to spin this data, nor the past few
months, as anything other than confirmation that the consumer has
not come roaring back," Dan Greenhaus, chief economic strategist
with Miller Tabak, wrote in a note to clients late Thursday.
Treasurys declined as economic optimism strengthened, with the
10-year yield pushing above 3% for the first time in nine days.
Yields move inversely to prices. Crude-oil futures edged up to
$75.81 a barrel.
In other markets, the euro failed to garner any new direction
from comments made by European Central Bank President Jean-Claude
Trichet. The ECB kept its benchmark interest rate unchanged, as did
the Bank of England at its monthly meeting. The euro was recently
trading at $1.2668, up from $1.2679 late Wednesday in New York.
Among stocks to watch, Goldman Sachs Group (GS) fell 0.9% after
Meredith Whitney cut her second-quarter earnings estimates for the
company, according to StreetInsider.com.
Wells Fargo (WFC) shares fell 0.8% after saying it will shut
down a unit that makes what the San Francisco bank calls
"non-prime" 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.