Stocks Rise Despite Weak Philly Fed Report
Thursday, August 15, 2002
NEW YORK — Stocks rose Thursday, getting a boost from surprisingly strong results from retailers like Target Corp. and as it became clear that the vast majority of corporate America's top brass swore to the accuracy of their financial results.
The Dow Jones index gained 74.83 points, or 0.86 percent, at 8,818.14 -- its highest close since July 9. The broader Standard & Poor's 500 Index rose 10.63 points, or 1.16 percent, at 930.25. The technology-laced Nasdaq Composite Index climbed 10.71 points, or 0.80 percent, at 1,345.01, after dropping as much as 1 percent.
The latest Reuters data showed more than 95 percent of about 700 companies that needed to certify met the Aug. 14 deadline. A drop in a key manufacturing index caused stocks to dip Thursday afternoon, but investors climbed back into stocks on hopes resilient consumer spending will help prop up the economy.
Retailers were a bright spot. Target (TGT) rose $2.93, or 9.1 percent, to $35.10 after saying earnings rose more than 26 percent, driven by higher sales and profits at its discount stores
Yum Brands Inc. (YUM) rose $1.32 to $30.50. The No. 2 restaurant operator reported higher sales in stores opened at least a year and raised its third-quarter earnings forecast, amid strong performances by its international operations and the Taco Bell chain.
Dell Computer (DELL) bounced between gains and losses ahead of its earnings, due after the closing bell. Shares of the No. 2 personal computer maker closed down 1 cent to $27.14.
After exchanges closed, Dell reported higher second-quarter earnings and revenue as market share gains allowed it to advance despite weak tech spending by corporations. The stock edged up to $27.45 in after-hours trading.
UAL Corp. (UAL), the parent of United Airlines, warned it may file for bankruptcy, sending its shares down as much as 40 percent in trading before exchanges opened. But shares closed higher by 28 cents at $2.73.
The latest economic data raised fresh worries about the key factory sector and a shaky U.S. economic recovery. The Federal Reserve Bank of Philadelphia showed that manufacturing activity in the U.S. mid-Atlantic region turned negative in August, retreating further from weak levels in July.
The business conditions index dropped to minus 3.1 in August from plus 6.6 in July, its first negative reading this year. Economists had expected the index to edge up to 7.2 in August. A reading below zero indicates contraction.
"The focus is what is going to happen with the economy and corporate profits," said Joe Stocke, portfolio manager with StoneRidge Investment Partners, which oversees about $800 million. That will cause some choppiness as the market is driven by the data coming out on a weekly basis."
Goldman Sachs analyst Laura Conigliaro cut investment ratings on storage equipment maker EMC Corp. (EMC) and Internet business computer maker Sun Microsystems Inc. (SUNW). saying it was doubtful these companies would rebound faster than the struggling industry. Both were cut to "market outperform" from Goldman's "recommended list."
EMC, though, managed to scramble up from early losses, gaining 10 cents to $7.29. Sun Micro, the second most active stock on the Nasdaq, lost 34 cents to $4.11.
"There are still question marks about the market, the economy and earnings going forward," said Patrick Boyle, a trader for Credit Suisse First Boston.
Brocade Communications Systems Inc. (BRCD) rose 91 cents to $15.96 after the computer data storage firm boosted its outlook for the current quarter, saying it was optimistic about the future of computer data storage networks.
Support -- where buyers are expected to swoop in -- is at 1,270 for the Nasdaq, 8,400 for the Dow and 880 for the S&P. Resistance -- the point where sellers are likely to emerge -- is at 1,350 for the Nasdaq, 8,810 for the Dow and 930 for the S&P, according to research firm Schaeffer's Investment Research. The levels are key elements of technical analysis, which studies prices, volume and charts.
Advancers beat decliners, with 5 stocks rising for every 3 that fell on the New York Stock Exchange and 17 gainers for every 16 decliners on the Nasdaq. Trading was active, with 1.50 billion shares changing hands on the NYSE, and 1.72 billion traded on Nasdaq.
The Russell 2000 index rose 1.32 to 390.73.
Overseas, Japan's Nikkei stock average rose 1.6 percent. In Europe, Germany's DAX index advanced 2.1 percent, Britain's FTSE 100 climbed 3.8 percent, and France's CAC-40 gained 4.1 percent.
Reuters and the Associated Press contributed to this report.
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