Wall Street stocks extended recent gains on Thursday as investors shrugged off new data giving mixed signals about the health of the US economy while strong performances in the information technology sector bolstered the leading indices.
The morning session was dominated by a number of downbeat data releases that showed slumping industrial activity across the US, rising initial jobless claims and declining business conditions among New York region manufacturers.
Still, the economic outlook remains opaque. The latest Philadelphia Fed survey, for example, suggested that the contraction in factory activity in the mid-Atlantic region moderated somewhat in May, adding to the fog.
In spite of early losses, a run in materials and energy stocks initially pushed indices into the black and as oil prices fell back, consumer discretionary stocks picked up the slack.
Meanwhile, a flurry of deal news and positive analyst comments helped information technology shares advance 2.1 per cent, underpinning gains on the major equity markets.
By the close, the benchmark S&P 500 had overturned earlier losses to climb 1.1 per cent to 1,423.52 while the Dow Jones Industrial Average was up 0.7 per cent to 12,992.25. The Nasdaq Composite added 1.5 per cent to 2,533.73.
On Tuesday US stocks made strong gains as investors responded positively
to relatively benign inflation data and digested better-than-expected earnings re-ports from Freddie Mac.
The financial sector added to those gains on Thursday, rising in tandem with the broader market rally and skirting comments by Ben Bernanke, the chairman of the Federal Reserve, who urged banks to raise more capital.
An index of financial stocks rose 1.2 per cent. Among the leading gainers were Citigroup and Lehman Brothers, which rose 2.1 per cent to $23.73 and 6 per cent to $44.77 respectively.
Amid the broader market rally industrials stocks were hobbled by the manufacturing data. The S&P 500 industrials index rose only 0.3 per cent as gains for Deere & Co, which added 2.9 per cent to $83.61, were offset by losses for United Technologies, which fell 1.2 per cent to $74.29.
General Electric was also in focus, after reports that it had hired Goldman Sachs to look at selling or seeking a partner for its appliances unit. GE shares fell 0.4 per cent to $32.37.
A handful of results from retailers highlighted the divergent fortunes of some companies in the sector, but the respite in oil prices lifted stocks across the board.
JC Penney said first-quarter net income slumped 50 per cent as shoppers reined back spending amid the US economic slowdown.
Tiffany & Co, the upmarket jeweller, posted first-quarter earnings that exceeded forecasts thanks to a “promising start to the year”.
JC Penney shares threw off early losses to gain 4.7 per cent to $46.32, Tiffany shares added 6.6 per cent to $48.88 while an index of consumer discretionary stocks rose 1.3 per cent.
Energy and material stocks dipped in mid-afternoon but bounced back by the close, adding 1.7 per cent and 1.4 per cent respectively.
Internet and media companies provided a frisson of excitement. Yahoo added 2.3 per cent to $27.75 after Carl Icahn launched a proxy battle to force the internet search company to reopen buy-out talks with Microsoft.
At the same time, CBS said it would buy web media company CNET Networks for about $1.8bn.
The move will broaden the broadcaster’s reach on the internet giving it a total of 54m unique users per month. CBS shares fell 2.4 per cent to $24.23 while CNET shares jumped 43.5 per cent to $11.41. As a whole, the information and technology sector was the strongest in the S&P 500, boosted by a bullish analyst report on semiconductor companies. Intel rose 4.7 per cent to $24.97 while Nvidia added 7.8 per cent to $23.78. The leading gainer, though, was Agilent Technologies, which jumped 8.6 per cent to $35.34 after the maker of scientific-
testing equipment reported a 41 per cent jump in second-quarter profit.
EMC, the maker of storage computers, followed close behind. It climbed 6.7 per cent to $17.80 on speculation that the company will sell part or possibly all of its holding in VMware.