updated 12/10/2004 8:39:40 AM ET 2004-12-10T13:39:40

Stocks rebounded from early losses on Thursday, closing higher as National Semiconductor Corp.’s better-than-expected earnings soothed investors’ concerns over higher unemployment and rising oil prices.

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National Semiconductor’s 22 percent rise in quarterly profits also offset poor sales figures from two other semiconductor makers and helped tech shares post small gains. The markets were headed substantially lower in early trading, due to the troubling economic data, before the chip maker released its earnings report.

“You saw the markets just turn right around after National Semi released their figures,” said Keith Keenan, vice president of institutional trading at Wall Street Access. “That helped restore a little optimism in the market, but there’s still a lot to be worried about. This could be pretty short-lived.”

The Dow Jones industrial average was up 58.59 points, or 0.6 percent, at Thursday’s close, while the broader Standard & Poor’s 500-stock index was up 6.43 points, or 0.5 percent. The Nasdaq composite index added 2.90 points, or 0.1 percent.

The surprise climb in unemployment claims — which rose by 8,000 to 357,000 last week — added to lingering concerns about the job market from Friday’s disappointing job creation report. Wall Street had expected the Labor Department to report just 335,000 new claims.

Investors remained cautious as crude oil futures rose for the second straight day, pushing past the $42-per-barrel mark. The market fretted about whether a small build in U.S. heating oil stocks was enough to last the winter, and pondered word from Kuwait’s oil minister Sheik Ahmad Fahad Al-Ahmad Al Sabah that OPEC may cut production early in 2005.

A barrel of light, sweet crude for January delivery settled 59 cents higher at $42.53 on the New York Mercantile Exchange.

“There isn’t any conviction out there right now on the part of investors,” said Lincoln Anderson, chief investment officer at LPL Financial Services in Boston. “They don’t have the conviction that profits have staying power into 2005. They don’t have much conviction that the economy’s going to grow at a decent clip. There’s a lot of undue pessimism out there.”

The good news from National Semiconductor helped the technology-heavy Nasdaq move into positive territory. Tech stocks started the session lower after Xilinx Inc. and Altera Corp., the two biggest makers of programmable microchips, each reported a larger drop in sales than was previously expected. National Semiconductor gained 79 cents to $16.79, while Xilinx fell $1.01 to $29.72, and Altera tumbled $1.73 to $20.47.

National Semiconductor’s earnings failed to revive the rest of the chip sector. Intel Corp. lost 25 cents to $22.76 and rival Advanced Micro Devices Inc. was down 80 cents at $22.10.

Telecommunications equipment maker Ciena Corp. increased its sales forecast for the current quarter by 20 percent, and posted a lower-than-expected loss for the past quarter. Ciena climbed 54 cents, or 23.08 percent, to $2.88.

Luxury home builder Toll Brothers Inc. surged $6.88 to $60.99 after profits soared 93 percent in the quarter and the company surpassed earnings forecasts by 25 cents per share.

Dow component McDonald’s Corp. gained 28 cents to $31.78. It reported sales at stores open at least a year rose 4.2 percent in November, with U.S. stores making the most gains.

DreamWorks Animation SKG Inc., in its first quarterly earnings report since going public, beat Wall Street profit forecasts by a penny per share, but disappointed Wall Street by pushing back the release of “Shrek 3” by six months, to May 2007. DreamWorks Animation dropped $2.51 to $37.69.

Discount bulk retailer Costco Wholesale Corp. slid 80 cents to $48.10 after the company’s quarterly sales and earnings reports were in line with Wall Street expectations, but future guidance remained cloudy.

Overseas, Japan’s Nikkei stock average fell 1.51 percent. In Europe, Britain’s FTSE 100 closed down 0.33 percent, France’s CAC-40 lost 0.73 percent for the session, and Germany’s DAX index dropped 1.21 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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