Industrial, Material Shares Lift Wall Street
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A late-session rally in industrial and basic materials stocks offset losses seen across the energy sector, lifting the markets into positive territory on the day.
The Dow Jones Industrial Average gained 21.6 points, or 0.17%, to 12471, the S&P 500 rose 3 points, or 0.23%, to 1296 and the Nasdaq Composite rose 13.9 points, or 0.51%, to 2725.
Alcoa (NYSE:AA), the biggest American aluminum maker, and industrial Caterpillar (NYSE:CAT) rallied better than 2% in late-day action, helping the Dow shed earlier losses. DuPont (NYSE:DD), American Express (NYSE:AXP) and Boeing (NYSE:BA) also posted solid gains.
Chevron (NYSE:CVX) was a substantial drag on the Dow, however, sliding more than 2%. The energy giant revealed late on Wednesday that its fourth-quarter results may come in "significantly" beneath its earnings from the prior quarter. IBM (NYSE:IBM), the technology behemoth, also weighed heavily on the blue-chip index. Indeed, the two companies combined subtracted more than 30 points from the Dow.
Also struggling were Bank of America (NYSE:BAC) and Coca-Cola (NYSE:KO).
Market participants parsed through a slew of European and economic developments on Thursday.
Easing European Debt Pressure
Spain sold double its target of paper maturing in 2015 and 2016 at an auction as investors began moving back into the weakened debt. The yield on the 2015 bonds fell to 3.384% from 5.187% at a similar auction in December. Italy also sold one-year bills at half the yield from an offering last month ahead of a more closely-watched auction of longer-term debt on Friday.
After the auction, Italy's borrowing costs on private markets dropped as well, falling to 6.72%, beneath the 7% mark it had been trading at earlier in the week.
Borrowing costs have been closely eyed by market participants as worries have mounted major that European countries, like Italy and Spain, will have difficulty refinancing their debt this year. In the past, smaller countries have gotten locked out of private borrowing markets, necessitating bailouts.
The European Central Bank held its main refinancing rate at 1% following two straight months of cuts. The ECB has been working to keep the European economy afloat while also keeping inflation in check. The Bank of England also said it will keep its benchmark interest rate at 0.5% and left its asset-buying program unchanged. Both moves were widely anticipated by market participants.
The euro rose 0.89% to $1.2819, while the U.S. dollar fell 0.52% against a basket of six world currencies.
Disappointing U.S. Economic Data
On the U.S. front, retail sales rose at a pace of 0.1% in December from the month prior, weaker than the 0.3% gain economists forecast. The weakest parts of the report were non-store retailers, electronics stores and general merchandise stores, which were somewhat offset by substantial gains in auto and building material sales.
New claims for unemployment benefits rose to 399,000 last week from an upwardly revised 375,000 the week prior. Economists were expecting a smaller rise to 375,000 from an initially reported 372,000. Last week, the monthly employment report showed the unemployment rate falling to 8.5% as the economy added 200,000 jobs in December as the labor market has slowly improved following steep job losses during the recession.
Having traded in positive territory for much of the session, energy futures made a late-day turn into negative territory. The benchmark crude oil contract traded in New York slumped $1.77, or 1.8%, to $99.10 a barrel. Wholesale RBOB gasoline slid 1.2% to $2.731 a gallon.
In metals, gold climbed $8.10, or 0.49%, to $1,647 a troy ounce.
Sears Holdings (NASDAQ:SHLD) shares plummeted after The Wall Street Journal reported CIT Group will not finance loans to supplies awaiting payments from the retailer.
Target (NYSE:TGT) unveiled a new $5 billion share buyback authorization that will kick in once its current $10 billion program ends in early 2012. The company also said it plans on boosting its annual dividend to $3 or more by 2017.
Royal Bank of Scotland (NYSE:RBS) plans on shedding roughly 3,500 jobs over the next three years as it works through a new regulator and market conditions.
European blue chips rose 0.27%, the English FTSE 100 slipped 0.15% to 5,662 and the German DAX climbed 0.44% to 6,179.
In Asia, the Japanese Nikkei 225 dipped 0.74% to 8,386 and the Chinese Hang Seng fell 0.3% to 19,095.