Stocks End Higher As Oracle Profits Override Financial Woes
NEW YORK (MarketWatch) -- U.S. stocks finished higher on Thursday, as blow-out profits from software-maker Oracle Corp. and hopes of more fireworks from Research In Motion Ltd. after the close helped overcome continuing troubles in the financial sector.
Stocks struggled for most of the session after bond insurer MBIA Inc. reported a large exposure to risky debt and Bear Stearns posted its first-ever quarterly loss.
But while the market already expects slowing U.S. growth and more damage from the credit crisis, some investors still hope that technology firms and other multinationals can benefit from global growth.
"The big question mark is really around earnings," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank. "But we have the likes of Nike, Oracle, and Research In Motion, still seeing solid capital spending and growth outside of the U.S."
The Dow Jones Industrial Average finished up 38 points at 13,245, off an afternoon low of 13,153 and a morning high of 13,288.
Some of the Dow's technology components -- IBM and Microsoft -- provided firm support for blue chips.
Financial components AIG , American Express , Citigroup Inc. and J.P. Morgan Chase , however, weighed on the Dow after more evidence of the damage of the credit crisis surfaced.
MBIA shares slumped more than 26% after the bond insurer disclosed $8.14 billion of exposure to complex credit products known as CDO squareds.
Bear Stearns still managed to rise nearly 1% after posting its first-ever quarterly loss as the company's mortgage-related write-down grew to $1.9 billion.
"Problems in the financial sector are again scaring the market," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank. "It's obvious this issue is going to linger for some time."
The S&P 500 index , which has a large proportion of financial stocks still gained 7.1 points to 1,460, while the tech-heavy Nasdaq Composite led the market, gaining 39.9 points, or 1.5%, to 2,640.
Techs at the helm
Leading tech shares, Oracle jumped 6.4% after the software maker posted a 35% rise in fiscal second-quarter profit, topping Wall Street's expectations.
NetSuite , of which Oracle CEO Larry Ellison held 61% at the end of November, priced its IPO at $26, above the target range of $19 to $22. The company initially pitched its IPO at $13 to $16, then raised its range to between $16 and $19.
Investors also bought shares of Research In Motion Ltd. ahead of its quarterly report after the close.
Trading volumes showed 1.3 billion shares exchanging hands on the New York Stock Exchange and 1.9 billion trading on the Nasdaq. Gaining issues topped decliners by 17 to 14 on the NYSE and by 18 to 11 on Nasdaq.
Economy
FedEx fell 1% after it reported a 6% profit fall, hit by rising fuel costs and weakness in the U.S. economy, and issued murky third-quarter guidance.
The market earlier received a boost after the government said the U.S. economy grew at a 4.9% annual pace in the third quarter, the fastest growth in four years. The 4.9% final estimate was unrevised from the previous estimate and was in line with expectations.
But inflation worries, which central bank officials have often cited recently, remained as the core personal consumption expenditure price index -- the Fed's favored inflation gauge -- rose at a 2% annual rate in the quarter, not the 1.8% previously reported.
In addition, a plunge in a manufacturing sector index for the Philadelphia region, downbeat weekly jobless claims and leading economic indicators, first fueled rising concerns about an economic recession in 2008.
Investors first sought the safe-haven of fixed-income assets before tech-enthusiasts helped lead stocks higher into the close. The benchmark 10-year Treasury bond finished down 3/32 to 102 22/32, yielding 4.042%.
The dollar rose against theeuro but fell a touch versus the Japanese yen. Crude-oil futures closed down 18 cents at $91.06 a barrel.
Overseas, the People's Bank of China increased its interest rate to 7.47% from 7.29% to combat inflation, while the Bank of Japan held interest rates at 0.5% and said downside risks to the Japanese economy are growing.
The Nikkei 225 ended virtually flat in Tokyo. In London, the FTSE 100 rose 0.6%.
U.S. stocks had ended mixed Wednesday after a volatile day that featured mixed signals on the credit crisis, with a potential downgrade of bond insurers dulling a mostly positive auction of funds to banks by the Federal Reserve.
Movers
Accenture rose 6.5% after the consulting group posted a 34% profit rise and upped its 2008 earnings outlook. Rival Capgemini rose in Paris trading.
Nike rose 3.5% after the world's biggest sneaker maker reported a 10% profit rise, topping analyst forecasts.
Ruth's Chris Steak House fell 9% after blaming a weaker economy for a lower of its earnings outlook.
On the M&A front, Eaton Corp. said it's buying two firms valued at as much as $2.8 billion to boost its electrical business.
By Nick Godt