By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- After an initial wobble, U.S. stocks
rose on Thursday, with high-growth and small-cap companies leading
gains.
Analysts noted that while markets are inching higher, the
disconnect between low bond yields and divergence between
small-caps and large-caps is a concern for investors.
The S&P 500 (SPX) was 6 points, or 0.3%, higher at 1,894.11,
with utilities and health care sector stocks leading the gains. The
Dow Jones Industrial Average (DJI) added 17 points, or 0.1%, to
16,550.41. The Nasdaq Composite (RIXF) gained 24 points, or 0.6%,
to 4,154.91, with biotech companies leading gains. The Nasdaq
Biotechnology index was up 2.6%.
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action.
Keith Springer, president of Springer Financial Advisors, says
that Thursday gains are a continuation of the Fed minutes
reaction.
"The stock market should have rallied stronger yesterday when
the Fed minutes revealed that Fed is not going to take away the
punch bowl any time soon," Springer said.
"But the larger issue is that the bond market -- where the
10-year yield is at 2.5%, is most likely correct to think the
economy is weakening. Therefore we expect a 10%-15% correction in
the stock market this summer," he added.
Jim Russell, senior equity strategist at U.S. Bank Wealth
Management, says softer economic data are beginning to concern
investors.
"If the economy continues to grow very tepidly by the end of the
year, when the Fed has exhausted its bond-buying stimulus program,
what other tools will they have to ramp up growth? That question is
worrying investors more than when the rate hikes will come,"
Russell said.
Ahead of the market open, stock futures got a lift from strong
manufacturing data out of China and Japan, however, gains quickly
dissipated. By afternoon, investors shrugged off
weaker-than-expected report on unemployment benefits.
New applications for unemployment benefits rose sharply in
mid-May, reversing a big drop earlier in the month that put initial
claims at a seven-year low.
Sales of existing homes rose 1.3% in April to a seasonally
adjusted annual rate of 4.65 million, the National Association of
Realtors reported Thursday, mostly in line with expectations.
The leading economic index for the U.S. ticked up in April to
101.4, the Conference Board said Thursday, while manufacturing
picked up to a 3-month high in May, according to the flash
purchasing managers index released by Markit on Thursday.
In earnings news, Best Buy (BBY) shares gave up earlier gains
and was up 1% after the retailer's adjusted first-quarter profit
beat expectations.
Dollar Tree (DLTR) posted first-quarter results that were in
line with expectations. Shares rallied 7.5%.
After the market closes, Hewlett-Packard Co. (HPQ) and Gap Inc.
(GPS) are among companies set to report. Best Buy, Dollar Tree, H-P
are stocks to watch
Sears Holdings (SHLD) said it would close 80 stores this year as
its fiscal first-quarter loss widened amid falling revenue and weak
same-store sales. Shares fell 1.2%.
Shares of Williams Sonoma Inc. (WSM) rose 8.2% after the
kitchenware retailer late Tuesday reported a rise in its
first-quarter profit, beating forecasts.
European stocks got a boost from preliminary euro-zone PMI data
that confirmed business activity in the region continued to pick up
in May. In Asia, the Nikkei 225 index was the best-performing
market, up 2.1% after Markit released its first-ever preliminary
version of Japan's manufacturing index, which rose to a two-month
high of 49.9 in May.
Gold for June delivery (GCM4) added $10 to $1,299.0 an ounce,
while crude for July delivery (CLN4) eased and the dollar lost
ground against the euro (EURUSD) after that upbeat PMI data.
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