Stocks finished higher Thursday 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 technology-rich Nasdaq Composite index bounced back from a sharp decline in Wednesday’s session and finished the day up 22.17 points, or 0.97 percent, while the Dow Jones industrial average rose 25.85 points, or 0.24 percent. The broader Standard & Poor’s 500-stock index added 7.11 points, or 0.56 percent.
Bonds fell, with the yield on the 10-year Treasury note rising to 4.37 percent from 4.34 percent late Wednesday. The U.S. dollar was mixed against other major currencies in European trading. Crude oil futures hovered around the $66 level.
Wall Street had little or no reaction to news before the start of trading of the airing of a new audiotape, purported to be from al-Qaida leader Osama bin Laden. The tape warns that al-Qaida members are preparing new strikes inside the United States, but that a truce is possible if the security of Muslim nations is guaranteed.
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.
In company news, AMD rose $2.98 to $37.13 after it reported a fourth-quarter profit on a 45 percent jump in sales, turning around a loss from the prior year and handily beating Wall Street expectations. The company also forecast a solid first quarter, saying sales could soar as much as 70 percent over last year.
EBay Inc. rose $2.33, or 5.2 percent, to $46.77 after Friedman Billings Ramsey upgraded it to “outperform” from “market perform,” saying its outlook was overly cautious.
Schlumberger Ltd., one of the world’s largest oil field services companies, rose $5.76, or 5.3 percent, to $114.87 after it declared a 2-for-1 stock split and said it is increasing its quarterly dividend to 25 cents per share, up from 21 cents a share. Halliburton Co. rose $2.35 to $71.75; Baker Hughes Inc. rose $3.13 to $72.47 and Noble Corp. rose $4.35 to $82.35 after Morgan Stanley upgraded the stocks to “Equal Weight” from “Underweight.”
While Apple Computer Inc. reported a record-breaking first quarter, its stock dropped $3.46 to $79.04 after its second-quarter outlook fell short of analysts’ expectations.
The Walt Disney Co. is in serious talks to buy Pixar Animation Studios Inc., the maker of the hit movies “Toy Story” and “Finding Nemo” among others, following months of exploring how to continue their profitable film distribution partnership, The Wall Street Journal reported Thursday. Disney rose $1.04 to $26.24; Pixar rose $1.61 to $58.87.
Overseas, Japan’s Nikkei stock average rose 2.31 percent after trading was halted early following a 2.94 percent drop Wednesday. Britain’s FTSE 100 rose 0.52 percent, Germany’s DAX index was up 0.65 percent, and France’s CAC-40 gained 0.88 percent.