(by Dr. Goldfinger)
US stocks rose on Thursday after a rough morning sent markets to year-low levels and buyers emerged. Technology stocks led the rally, as investors began bargain hunting, especially in the battered semiconductor sector.
The Dow was up fractionally to 10,050.33. The S&P 500 was 0.3 per cent higher at 1,096.84, while the Nasdaq rose 0.8 per cent to 1,889.06.
Market participants said the turnround was based not on any specific event or earnings report, but on technical factors.
Technical signs were still worrying investors by the close, with the Dow, S&P and Nasdaq all falling below their 200-day moving averages, key support levels for the markets.
Although the earnings season has brought broadly upbeat results - with several notable disappointments - investors are worried about the prospects for a slowdown in profit growth. This has been exacerbated by more cautious company guidance than Wall Street was hoping to hear.
Online auctioneer eBay edged up 1 per cent to $77.39 in spite of disappointing investors with a lower-than-expected full-year earnings forecast. Investors largely ignored the fact that the company more than doubled its second-quarter profits on a 52 per cent rise in sales.
Caterpillar dragged on the Dow, falling 4.4 per cent to $73.53, after the earth-moving equipment maker missed Wall Street expectations in spite of a 38 per cent jump in profits. Investors were unmoved by the company boosting its 2004 sales and earnings growth estimates.
Shares in AIG dipped 0.2 per cent to $67.23 as investors shrugged off the insurance giant’s 26 per cent jump in earnings.
McDonald’s, the hamburger chain, slid 0.3 per cent to $27.57 in spite of reporting 25 per cent profit growth and its best sales growth in 17 years thanks to a new push on salads and promotional activities.
Qualcomm, the wireless technology company, rose 7.1 per cent to $72.50 as profits more than doubled on demand for advanced mobile phones. The company raised full-year earnings and revenue forecasts.
Sears Roebuck dropped 2.9 per cent to $33.93 after the retailer’s profit plunged 83 per cent because of weak sales and charges for severance costs and depreciation. The company also slashed its forecast for the full year.
Investors kept Microsoft in focus ahead of its earnings, due after the closing bell. The company’s plan to give back to investors more than $75m in the next four years briefly cheered investors earlier in the week. Shares edged up 0.5 per cent to $29.