Stocks recuperate from earlier losses
NEW YORK » Stocks turned higher yesterday and regained most of the ground they lost in the previous session following a bright first-quarter outlook from semiconductor maker Advanced Micro Devices Inc. and upgrades of oil services stocks.
AMD's forecast heartened tech investors who were spooked Wednesday by disappointing earnings forecasts from Intel Corp. and Yahoo Inc. Since semiconductors form the guts of much high-tech equipment, AMD is seen as a bellwether and its outlook was enough to make investors overlook a dimmer forecast from Apple Computer Inc.
"People are happy that the Intel bad news didn't translate to other semiconductor stocks," said Robert Streed, portfolio manager of Northern Trust Select Equity Fund in Chicago.
Investors also cheered oil services company Schlumberger Ltd.'s announcement of a 2-for-1 stock split and Morgan Stanley's upgrades of oil services businesses, including Halliburton Co. and Baker Hughes Inc.
The Dow Jones industrial average added 25.85, or 0.24 percent, to 10,880.71.
Broader stock indicators also closed higher. The Standard & Poor's 500 index rose 7.11, or 0.56 percent, to 1,285.04, and the Nasdaq composite index gained 22.17, or 0.97 percent, to 2,301.81.
Crude oil futures rose to a four-month high. A barrel of light crude settled at $66.83, up $1.10, in trading on the New York Mercantile Exchange.
Earnings season is off to a nervous start, with investors reacting strongly to earnings or guidance that fall short of analysts' estimates.
"The market has been weak in the last few days on a number of worries," said Joseph Lisanti, editor of Standard & Poor's weekly newsletter, the Outlook. "One of them has been earnings. We think that despite a couple of warnings and misses, earnings in general for the fourth quarter of 2005 are going to look pretty decent."
The day's economic news was mixed. Construction of new single-family homes surged to an all-time high in 2005 but construction activity fell sharply in December, sending a signal that the nation's long housing boom could be cooling off.
Separately, the Labor Department said the number of Americans filing for unemployment benefits fell to 271,000 last week, an unexpectedly large drop of 36,000 from the previous week, indicating strength in job markets. Investors are watching employment numbers closely for any hint that wages could rise, which they fear would be inflationary.