U.S. stocks rose for a second day on Thursday as optimism about corporate earnings and a greater-than-anticipated increase in business inventories helped offset concerns about retail sales and initial unemployment claims. An advance in technology shares before bellwether Intel reported its earnings also helped broader indexes.
After the bell, Intel’s (NASDAQ:INTC) quarterly numbers, in a marked improvement from the previous year, came in well ahead of Street expectations. The company said it earned 40 cents on revenue of $10.6 billion during the fourth quarter. A year-long rally, helped by Intel yesterday, has sent tech-shares up a mammoth 70.4% and the gains stand only behind the 81% advance in basic material shares.
However, if companies continue to report too-high results, the case for interest rate hike and removal of accommodative measures would get strengthened. That could be ironic as traders would be cautious to make bigger bets while being skeptical about demand, especially at the consumer end.
Yesterday, the Dow Jones industrial average added 30 points, or 0.3%. The broader S&P 500 index edged up 3 points, or 0.2%. Both indexes closed at their highest level in more than 15 months. The Nasdaq composite advanced 9 points, or 0.4%, ending at its highest level since September 3, 2008.
Volume remained relatively light as only 0.888 billion shares exchanged hands as advancing shares edged ahead of decliners by a four-to-three margin. Market’s measure of volatility, the CBOE Vix, continued lower, down 0.5% to 19.08.
On the S&P 500, sector action was evenly split between gainers and losers. Those ending the day in the green were technology (+0.7%), health care (+0.7%), financials (+0.6%), oil and gas (+0.2%) and consumer goods (+0.1%).
A well-received Treasury auction of 30-years buoyed prices for US government securities and sent prices on the 10-years up 13/32, as its yield fell to 3.742%. The US dollar rose against a basket of currencies, gaining against the euro after European Central Bank President Jean-Claude Trichet warned of looming debt difficulties. Gains in the US dollar sent gold prices down $6.20 to $1143. Commodities also witnessed weakness.
