Yahoo shares rose 6.1 per cent to $14.44, despite a verbal broadside from sacked former chief executive Carol Bartz.
Ms Bartz branded her former executive colleagues “doofuses”, but Yahoo investors were cheered when Third Point, an activist hedge fund, revealed it had taken a 5.2 per cent stake in the company. Third Point will push for the resignation of the board of directors and a clearer strategy, the fund said in filings.
But the broad S&P 500 closed down 1.1 per cent at 1185.88, despite breaking through the 1,200 barrier earlier in the day, a level it has only touched on three other days since early August.
Traders appeared to take advantage of Wednesday’s strong bounce – when the S&P 500 rose almost 3 per cent – to book profits ahead of President Obama’s speech to Congress on jobs on Thursday evening.
“Our metrics still suggest risk is elevated and with no end in sight to European problems, our position is to sell into the strength of the market,” said Channing Smith, fund manager at Tulsa-based Capital Advisors.
Semiconductor stocks surged, with Micron Technology, maker of Dram memory chips for personal computers, up 3.1 per cent at $6.25, extending its
gains for the week to almost 15 per cent.
SanDisk rose 2.4 per cent to $38.52, and even embattled sector heavyweight Cisco was among the top gainers in the S&P 500, up 2.6 per cent at $16.29.
Semiconductor stocks tend to be highly cyclical since demand for the components, which feature in everything from smartphones to solar panels and industrial machinery, is closely linked to global growth.
But on Thursday the surge seemed to be driven by a positive earnings forecast by Nvidia on Wednesday.
Analysts continued to warn of a potential fall in demand. JPMorgan lowered earnings estimates across the industry, citing “the tougher macro-environment” and “signs of weakness appear across the board”.
Elsewhere, gold miner Newmont Mining rose 2.9 per cent to $65.66. Trading in the stock has soared in the past month as equity investors seek exposure to rising gold prices as a hedge against global growth.
Newmont is now up 18 per cent since the start of August, while the S&P 500 index is off 8 per cent over the same period.
But gold analysts point out this breaks with recent trading patterns in the stock. Until August, gold stocks had closely tracked stock market indices this year.
“If you look at the betas of gold mining stocks against the S&P, they had become much more correlated with the index over the past five or six years,” says Alex Hacking at Citigroup.
Mr Hacking said safe haven-seeking investors had triggered the more recent divergence between the stock and the broad index, but noted that gold mining stocks have underperformed gold itself.
“Central banks and risk averse investors want physical gold, not a paper entitlement to the dividends of a gold mining company. Also whenever you get a spike in a metal price, the price-earnings ratios of associated mining stocks naturally come down. The market is distrustful of spikes in commodity prices, and is not willing to pay a high share price for earnings that might be temporary.”
Filtration company Pall Corp, which fell 9.8 per cent to $44.03, was by far the biggest mover in the index.
At 76 cents a share, Pall’s preliminary fourth-quarter results missed expectations, and Eric Krasnoff, chief executive, conceded they pointed to a “disappointing finish to an otherwise good year”.
Urban Outfitters fell 1.2 per cent to $24.96 as RBC Capital and Citigroup lowered earnings per share estimates for the current quarter.
Urban shares are now off 3.9 per cent for the week after the company used a scheduled update late on Tuesday to report that same-store sales were down as much as 3 per cent in the third quarter to date.
Macroeconomic news was mixed with jobless claims rising unexpectedly by 2,000 to 414,000 in the week ended September 3 but the US trade deficit eased slightly in July as imports fell.
Financial stocks in the S&P 500 were down 2.3 per cent, more than any other sector. Bank of America fell 3.7 per cent at $7.20 and Citigroup was off 3.5 per cent at $27.98.
The Dow Jones Industrial Average was down 1 per cent at 11,295.81 and the Nasdaq Composite index was off 0.8 per cent to 2,529.14.
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