Stocks Chug Higher as Growth Signs Trump Inflation Jitters
FOX Business: The Power to Prosper
Wall Street clinched fresh 2011 highs on Thursday as concerns about a hotter-than-expected inflation gauge were overshadowed by new evidence the economic recovery continues to accelerate.
Today’s Markets
The Dow Jones Industrial Average rose 29.97 points, or 0.24%, to 12318.14, the Standard & Poor's 500 added 4.11 points, or 0.31%, to 1340.43 and the Nasdaq Composite gained 6.02 points, or 0.21%, to 2831.58. The FOX 50 picked up 2.02 points, or 0.21%, to 951.78.
Boosted by rallying energy stocks like Valero (NYSE:VLO), U.S. markets overcame early selling sparked by rising unemployment claims, geopolitical concerns and the biggest jump in core consumer prices since October 2009. Instead, Wall Street focused on a new report revealing Philadelphia-area manufacturing activity increased to the strongest level in seven years, a further sign of strong growth.
“There’s a little bit of an uptick in inflation, but I don’t think it’s enough to derail the market,” said Nick Kalivas, vice president of financial research at MF Global. “To some degree, signs of inflation is something the market would like to see at this stage.”
Thursday's rally left the blue chips at their highest level since June 2008 and the Nasdaq Composite in territory unseen since October 2007 -- two months before the Great Recession officially began -- and near 10-year highs. The broad S&P 500 landed in the green for the 16th time in 20 sessions.
“We are in the sweet spot right here," said Marc Pado, U.S. market strategist at Cantor Fitzgerald. “The immediate situation is an economy that is improving, unemployment that is trending down and domestic profitability that is getting better.”
Just over half of the Dow's 30 members advanced, led by DuPont (NYSE:DD) and Coca- Cola (NYSE:KO), which hiked its dividend. The index's biggest percentage losers were American Express (NYSE:AXP) and Hewlett-Packard (NYSE:HPQ).
Shrugging off NetApp's (NASDAQ:NTAP) tepid guidance, the Nasdaq Composite held onto slight gains amid strength from tech stocks like Nvidia (NASDAQ:NVDA) and Garmin (NASDAQ:NVDA).
“I’m impressed by this market’s resilience to bad news. I’m a little worried over the fact that volume has gotten light. However, everything else is in line,” said Pado.
The energy sector provided a boost to the markets, rallying 1% as crude oil eclipsed $86 a barrel. Individual stocks like Valero and Transocean (NYSE:RIG) posted even stronger gains.
After struggling during early trading, crude oil closed sharply higher, perhaps benefiting from concern triggered by Iran confirming two of its warships will cross the Suez Canal. Crude jumped $1.37 a barrel, or 1.61%, to $86.36. Gold gained $10.00 a troy ounce, or 0.73%, to $1,384.70.
Earlier in the day Wall Street struggled to rally around the Philadelphia Fed survey, which showed manufacturing activity in the Philly area surged in February to a seven-year high of 35.9, well above January’s 19.3 and forecasts for 21. However, some may be alarmed by the prices paid component, which jumped 13 points to territory unseen since July 2008.
Separately, the Labor Department said consumer prices increased at a retail level by 0.4% in January, slightly hotter than the 0.3% economists had forecasted. Excluding food and energy, prices inched up 0.2%, above forecasts from economists and the hottest reading since October 2009.
Traders have been watching for signs of an alarming spike in inflation due to the strengthening economy and the Federal Reserve's easy-money policies.
The Labor Department also reported initial jobless claims jumped by a slightly-stronger-than-expected 25,000 last week to 408,000. Continuing claims climbed to 3.911 million, up from 3.888 million the prior week.
Corporate Movers
Nasdaq OMX Group's (NASDAQ:NDAQ) talks about a potential tie-up with the Intercontential Exchange (NYSE:ICE) have reached a critical stage where board members on both sides are being briefed about the talks, FOX Business's Charles Gasparino reported. In fact, Nasdaq has hired Bank of America (NYSE:BAC) to advise it on deals in the wake of Deutsche Boerse's buyout of Big Board parent NYSE Euronext (NYSE:NYX).
Apple’s (NASDAQ:AAPL) shares slid 1.6% amid continued concerns about the health of its visionary CEO, Steve Jobs, who is expected to be among a number of tech execs meeting with President Barack Obama Thursday evening.
Weight Watchers (NYSE:WTW) shares rocketed 45% to lifetime highs as shareholders cheered its 2011 EPS view of $3.50 to $3.85, which would blow away the Street’s view of just $2.77. The diet company’s fourth-quarter non-GAAP EPS of 64 on sales of $356.7 million also handily beat expectations.
Nvidia (NASDAQ:NVDA) leaped 10% a day after the graphics chip maker easily exceeded estimates with a fourth-quarter profit of 29 cents a share. Nvidia also forecasted first-quarter sales of $940 million to $957 million, compared with estimates for $889 million. Shareholders proved to be unfazed by weaker-than-expected sales of $886.4 million.
Cliff Natural Resources (NYSE:CLF) impressed the markets with a fourth-quarter profit of $2.82 a share, compared with forecasts for just $2.16. The miner’s sales growth of 73% to $1.4 billion came in shy of estimates, but that didn’t stop the stock from jumping 7%.
Coca-Cola (NYSE:KO) was the best performing blue-chip stock after the beverage giant hiked its dividend by 7% to 47 cents a share.
NetApp (NASDAQ:NTAP) tumbled 7% after the data storage equipment maker issued a tepid profit view for the current quarter that would trail estimates.
Timberland (NYSE:TBL) surged 30% as its fourth-quarter profit of 82 cents a share blew Wall Street’s estimate of 51 cents out of the water. Boosted by a 17.6% leap in same-store sales, the footwear maker’s revenue climbed 16.8% to $491.1 million, well ahead of forecasts for $411.6 million.
Duke Energy (NYSE:DUK) grew its fourth-quarter profits by 23%, but posted weaker-than-expected non-GAAP EPS of 21 cents. Analysts had called for EPS of 23 cents. On the other hand, the power company's revenue increased by 11% to $3.45 billion, solidly topping forecasts for $3.16 billion.
J.M. Smucker’s (NYSE:SJM) profits slipped 2.6% during its fiscal third quarter, but the maker of Jif peanut butter’s non-GAAP EPS of $1.27 topped estimates. Revenue rose 8.8% to $1.31 billion, compared with consensus calls for $1.25 billion. Smucker also hiked its full-year non-GAAP EPS view to $4.60 to $4.65, compared with estimates for $4.66.
Global Markets
The U.K.'s FTSE 100 inched up 0.03% to 6087.38, Germany's DAX fell 0.12% to 7405.51 and France's CAC 40 closed up 0.03% to 4152.31.
In Asia, Japan's Nikkei 225 rose 0.26% to 10836.60, Hong Kong's Hang Seng advanced 0.63% to 23301.80 and China's Shanghai Composite added 0.10% to 2926.96.