U.S. stocks trade higher; Yasser Arafat reported dead
Thursday November 4, 11:47 am ET
By Mark Cotton
NEW YORK (CBS.MW) - U.S. stocks traded higher Thursday on reports Palestinian leader Yasser Arafat has died in France, bolstering hopes a new leader may improve the chances of a Middle East peace agreement.
"The market would probably interpret his passing as increasing the chance of peace in the Middle East," said Mark Bryan, senior vice-president at Brean Murray.
The Dow Jones Industrial Average (^DJI - News) was sitting at its high for the session, up 50 points, at 10,186.
Within the benchmark index, Wal-Mart rose 0.8 percent after it said its fiscal third quarter earnings would be at the high-end of its previously forecasted range, offsetting a sluggish October same-store sales performance.
Alcoa (NYSE:AA - News) rose 1.5 percent after Canadian rival Alcan posted a 97 percent rise in third quarter profit.
General Motors (NYSE:GM - News) climbed 1.6 percent, rebounding from a pullback in the prior session after the car maker reported a 5 percent drop in October sales.
On the negative side, Pfizer (NYSE:PFE - News) shares fell as much as 7.5 percent after Goldman Sachs analysts issued a note saying the company will have to do another year-long clinical study in order to be able to launch its blockbuster pain reliever drug Celebrex in Japan. The drug maker's shares were last off 1.9 percent.
Boeing shed 1.8 percent on a broker downgrade due to commercial aircraft delivery concerns.
The Nasdaq Composite Index (NasdaqSC:^IXIC - News) was last up 1 point, at 2,005. However, weakness in the semiconductor sector (Philadelphia:^SOXX - News) after a Bank of America downgrade of a number of chip equipment makers kept a cap on gains.
The S&P 500 Index (CBOE:^SPX - News) was up 6 points, at 1,149.
Retail round-up
The latest same-store sales showed lower-income shoppers tightened their purse strings, while wealthier shoppers continued to spend feverishly.
But the results outpaced expectations at the International Council of Shopping Centers, which just this week lowered its forecast to a gain of 3 percent.
"There were pockets of real strength that lifted the overall picture," said ICSC Chief Economist Michael Niemira. With 71 stores reporting, the results racked up a 4 percent gain, the best performance since May.
Wal-Mart confirmed that October's sales results were at the low end of expectations, although the retail giant's third quarter earnings are likely to come in ahead of forecasts, thanks to a tax rate change.
The Bentonville, Ark., company said that though total sales came in below expectations, gross margins were stronger and a change in its tax rate fueled earnings at the "high end" of its per-share forecast range of 52 cents to 54 cents. Wal-Mart gained in morning trading.
Target, (NYSE:TGT - News) ,JC Penney (NYSE:JCP - News) , Nordstrom (NYSE:JWN - News) , Federated Department Stores (NYSE:FD - News) and The Talbots (NYSE:TLB - News) were some of the other retailers which experienced a solid month of October.
Turning in a poor performance last month, Pier 1 Imports (NYSE:PIR - News) lowered third quarter outlook due to continued weak store traffic and pressure on margins in October, and expectations that consumers will postpone gift-related purchases until closer to the actual holidays. Pier's stock was last down 3.4 percent.
Sharper Image (NasdaqNM:SHRP - News) also warned of a larger-than-expected third quarter loss on declining margins and slightly lower than anticipated sales. The company's stock slumped 9.2 percent in early trading.
Also, shares of AnnTaylor Stores (NYSE:ANN - News) fell 3 percent after it lowered its third quarter forecast on weak sales at namesake division, despite a good October which saw the retailer post a 6.7 percent rise in same-store sales.
On the economic front, the latest jobless claims offered some ammunition to those investors who believe economic growth in the U.S. is holding up well.
Initial claims for state unemployment benefits fell 19,000 to 332,000 last week, the Labor Department reported Thursday.
The decline was larger than expected. Economists were expecting a drop in initial claims to about 340,000, according to a survey conducted by CBS Marketwatch.
A portion of the decline was due to fewer claims from Florida, an indication that the impact from the hurricanes that battered the state in August and September is lessening, a government official said. Hundreds of businesses in Florida were damaged by the storms.
However, the Labor Department also said productivity growth in the American workplace slowed in the third quarter.
Currencies, gold, oil, bonds
On the foreign exchange markets, the dollar was coming under pressure against its major European counterparts.
The 'safe haven' currencies, chiefly the Swiss franc, picked up some strength amid reports that Palestinian leader Yasser Arafat had slipped into a coma in a Parisian hospital.
Concern also resurfaced about the ability of the new Bush administration to rein in the trade deficit.
The euro struck an 8 1/2 month high vs. the dollar at $1.2870. Against the Swiss franc, the dollar fell 0.5 percent, to 1.1869, an eight-year low.
The weak dollar sent gold futures above $430 an ounce, their highest level in seven months.
Crude-oil futures were little changed in early trading after logging a near 3 percent gain Wednesday in the wake of President Bush's re-election, tight U.S. distillate stocks, and a fresh threat of bankruptcy at Russian oil giant Yukos.
Crude for December delivery was last down 6 cents at $50.82 in early trading in New York.
Bonds hung on to modest on the relative weakness in stocks and steady energy prices.
The benchmark 10-year note was last up 3/32 at 101 15/32. Its yield (CBOE:^TNX - News) stood at 4.05 percent.
Turning back to the broader market for equities, advancers outpaced decliners by a 17 to 12 score on the New York Stock Exchange, while there were 17 losers for every 10 winners on the Nasdaq.
Volume was 488 million on the Big Board, and 597 million on the Nasdaq.
Other stocks in focus
Credit Suisse First Boston cut its rating on Boeing Co. (NYSE:BA - News) to "neutral" from "outperform" and lowered its price target on the stock to $49 from $55.
The broker cited indications that AMR Corp (NYSE:AMR - News) , parent company of American Airlines, is renegotiating Boeing deliveries. Boeing shares were off 1 percent at $50.60 in early trading.
In sharp contrast, European defense group EADS, the majority owner of aircraft maker Airbus, lifted its 2004 earnings outlook on expectations of higher aircraft sales.
In other news, shares of Qualcomm Inc (NasdaqNM:QCOM - News) fell 3.5 percent after the company offered a first quarter outlook below current analyst expectations.
The wireless equipment maker also said fourth quarter sales declined from the previous quarter due to fewer shipments of high-end chips for wireless phones.
Meanwhile, Banc of America analyst Mark Fitzgerald lowered his ratings on Applied Materials (NasdaqNM:AMAT - News) and KLA-Tencor (NasdaqNM:KLAC - News) to "sell" from "neutral", and cut Lam Research (NasdaqNM:LRCX - News) to "neutral" from "buy" due to concerns about excess inventories and overly high valuations. Shares in all three companies were lower in morning trading.
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