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Productivity, retail
reports boost stocks
NEW YORK >> Better-than-expected reports on retail sales and productivity sent stocks mostly higher yesterday, but gains were limited amid investors' lingering concerns that prices might still be too high.
"It seems clear to me this economy will accelerate and earnings growth is going to be good," said Scott Wren, equity strategist for A.G. Edwards & Sons. "But we've had a lot of talk that in the second half of the year we'll finally see some big earnings and economics numbers. ... There's still concern the second half won't pan out the way many people thought."
The Dow Jones industrial average closed up 64.71, or 0.7 percent, at 9,126.45. The Nasdaq composite index slipped 0.50, or 0.03 percent, to 1,652.18. The Standard & Poor's 500 index rose 7.04, or 0.7 percent, to 974.12. The Russell 2000 index fell 0.14, or 0.03 percent, to 453.77.
Advancers beat decliners 8 to 5 on the New York Stock Exchange. Volume was light at 1.69 billion shares, less than the 1.85 billion traded Wednesday.
The price of the Treasury's 10-year note closed up 716 point, while its yield fell to 4.21 percent from 4.27 percent Wednesday. Two-year Treasury notes were up 116 point, while their yield dropped to 1.71 percent from 1.76 percent Wednesday.
The Labor Department reported business productivity grew at a surprisingly strong annual rate of 5.7 percent in the second quarter, the best showing since fall 2002. The reading also was an improvement from the 2.1 percent growth notched in the first quarter of this year.
In another report, the department said new jobless claims fell by a seasonally adjusted 3,000 to a six-month low of 390,000 for the work week ending Aug. 2. It was the third week in a row that claims stood below 400,000.
Stocks have been pressured in recent weeks by rising interest rates and investors' worries that the recent rally might have come too fast. Until investors see strong evidence of a solid economic recovery, gains will likely be limited, analysts said.
"The market has been in consolidation," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "Oil prices and bond yields have been rising in recent weeks, and that's created a bit of profit-taking in the stock market."
Retailing stocks advanced yesterday after a string of companies reported July sales exceeded Wall Street's expectations, due to warm weather and significant discounting.
Wal-Mart, which reported strong sales and raised its second-quarter earnings forecast, rose $1.26 to $57. Best Buy gained $5.81 to $46.49, while Gap rose 45 cents to $18.16. Both companies also posted better-than-anticipated July sales.
Intel fell 15 cents to $23.99 after the Internal Revenue Service raised the chipmaker's tax liability by about $600 million following a review of the returns in 1999 and 2000.
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