Thursday November 15, 5:37 pm Eastern Time
GLOBAL MARKETS-Dow, dollar up; bonds, Nasdaq weaker
NEW YORK, Nov 15 (Reuters) - Blue-chip stocks and the dollar rose while bonds fell on Thursday as the U.S.-led campaign made advances in Afghanistan and an economic rebound seemed imminent, making further interest rate cuts by the Federal Reserve less likely.
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However, technology stocks edged lower after chip gear giant Applied Materials Inc. (NasdaqNM:AMAT - news) reported disappointing earnings.
``People continue to get a little bit more optimistic every day as long as we don't get bad economic data, or earnings or some terrorist attack or this Afghanistan thing suddenly turns,'' said Uri Landesman, chief investment officer with AFA Management Partners.
The broad market finished flat. Oil companies' stocks continued to slide as crude oil prices slumped again to their lowest level in more than two years amid squabbles between the Organization of Petroleum Exporting Countries and its rivals over oil-output curbs.
But airline and hotel stocks rose, continuing to rebound after Monday's plane crash in New York. UAL Corp. (NYSE:UAL - news) climbed 6.9 percent after its United Airlines unit said it will become the first major U.S. airline to put stun guns in every cockpit in its fleet following the Sept. 11 attacks on the United States.
The blue-chip Dow Jones industrial average (^DJI - news) ended up 48.78 points, or 0.50 percent, at 9,872.39. The broader Standard & Poor's 500 Index (^SPX - news) edged up 1 point, or 0.09 percent, to 1,142.24. The technology-laced Nasdaq Composite Index (^IXIC - news) was off 2.62 points, or 0.14 percent, at 1,900.57.
In the latest economic data, manufacturing activity in the U.S. mid-Atlantic region contracted for the 12th month in a row in November, but the pace of deceleration slowed, according to a survey released by the Federal Reserve Bank of Philadelphia.
Earlier, Washington said the number of Americans filing weekly jobless claims dropped unexpectedly for the third straight week, but the number of workers staying unemployed was up 18 percent since early September.
Applied Materials fell $1.62 to $39.09 after its profits sank 97 percent, and left its mark on other chip stocks.
``Obviously, we had a great week so far, and we are consolidating some gains and Applied Materials is putting a little bit of a damper on the market,'' said John Forelli, senior vice president at Independence Investment LLC, which oversees $20 billion. ``But investors are starting to get confident that we are not going to retest the old lows.''
Eastman Kodak Co. (NYSE:EK - news) jumped $1.34 to $28.62, its 4.9 percent gain contributing a big chunk of the rise in the blue-chip Dow. The photography giant will realign its operations to cut spending and boost lagging profits.
Exxon Mobil Corp. (NYSE:XOM - news), the No. 1 U.S. oil company and a Dow stock, fell $1.51 to $37.19. Oil prices sank after OPEC raised the stakes in a game of high-risk poker with rival oil producers. The market reacted sharply to remarks from Kuwait's oil minister expressing opposition to OPEC output cuts without non-OPEC cooperation.
The Philadelphia oil services index (^OSX - news) sank 10.59 percent, reflecting weakness in companies like Schlumberger Ltd. (NYSE:SLB - news), down $2.92 to $43.18.
Wall Street took heart from news of more progress in the U.S.-led campaign in Afghanistan. Washington said it was ``tightening the noose'' around Osama bin Laden in Afghanistan, as thousands of his Arab troops and Taliban protectors were surrounded in the northern city of Kunduz, facing a fight to the death.
But pundits also warned that as far as the market is concerned, it will be back to Square One, once the enthusiasm for bombing the Taliban wears off.
``Hopefully, we will hang bin Laden from the nearest lamp post. But then you've got to go back to fundamentals,'' said Jon Brorson,director of equities at Northern Trust Fund, which oversees $330 billion. ``The economy is still pretty sluggish. ... We are looking for a sluggish upturn and you have the earnings situation. It will be back to reality.''
Wall Street's largest brokerage houses fell on concerns strength in their stocks had outpaced their profit outlooks. The SEC Broker-Dealer index (^XBD - news) fell 2.34 percent. The index has risen more than 46 percent since hitting a recent trough of 336.17 in the aftermath of the Sept. 11 attacks.
Hopes for an economic snapback next year, fueled by sharp interest-rate cuts by the Federal Reserve and a hefty stimulus package by Washington, have lifted stocks well off from lows hit after the Sept. 11 attacks. But investors are still wondering about the sustainability of the market's rally because the economy and corporate earnings continue to struggle.
Homebuilders fell for a second day, as investors took profits from the group's recent rally. Also a big drop in 10-year Treasury bond prices ignited fears of higher mortgage rates, analysts said. The S&P homebuilding index (^SPHOME - news) fell 5.64 percent.
At 4:08 p.m. (2108 GMT), benchmark 10-year notes tumbled 1-30/32 to 101-23/32, yielding 4.78 percent, the highest since Sept. 10. Thirty-year bonds plunged 2-4/32 to 102-8/32, yielding 5.23 percent, the highest since Oct. 29.
Two-year notes were down 14/32 to 99-18/32, yielding 2.97 percent, the highest since Sept. 13 and up 0.57 percentage point in the past five sessions.
The euro settled at 88.19 cents, down from 88.29 cents late Wednesday. The dollar rose to 122.32 Japanese yen from 121.55 yen.
Oil prices fell nearly 12 percent to two-year lows as Kuwait opposed OPEC output cuts without reductions by producers outside the cartel. NYMEX December crude oil futures fell $2.29 to $17.45 a barrel.
Gold fell to nine-week lows as speculative selling took the metal to its lowest levels since the Sept. 11 attacks on the United States. COMEX December gold futures fell $2.70 to $275.30 an ounce.
Overseas, London's benchmark FTSE 100 index dipped 2.5 points or 0.05 percent to 5,238.2. In Tokyo, the Nikkei average rose 403.13 points or 4.0 percent to 10,489.89, the highest close since Nov. 6.
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