U.S. Stocks Rise After 3-day Losing Streak
NEW YORK (MarketWatch) -- Stocks rose firmly on Thursday, as investors keen to end a three-day losing streak found support from a report showing fourth-quarter growth was unexpectedly revised higher.
"There's a little bit of a boost from the GDP and a little bit of a need for stability," said Jay Susskind, director of trading at Ryan, Beck & Co.
Stocks rallied last week on hopes that the Federal Reserve is leaning closer to cutting interest rates should the economy weaken too much. But Fed Chairman Ben Bernanke on Wednesday said the central bank remained concerned about inflation, putting a damper on those hopes.
With fourth-quarter growth revised slightly higher Thursday, "the market understands that things aren't as good as was thought last week, but not as bad as was thought yesterday," Susskind said.
The Dow Jones Industrial Average gained 48 points to 12,348, as 25 of its 30 stocks advanced.
Money-managers were also eager to fill their portfolios before the end of the month, which marks the end of the first quarter. "Today's give an opportunity for end-of-quarter window-dressing, because tomorrow is loaded up with key economic data," Susskind said.
Among blue chips, Citigroup rose 1% after saying it planned to roughly double its China branch network in 2007. . And Boeing Co. gained 0.3% after Colombia's largest airline, Avianca SA, said it would buy 10 of Boeing's 787 Dreamliner aircraft. .
Intel was flat after saying it would make design changes to boost microchip performance, including adopting techniques from rival Advanced Micro Devices . AMD fell 2%.
The S&P 500 index rose 5.8 points to 1,422, while the Nasdaq Composite climbed 1.1 points to 2,428.
Stock futures extended their gains after the Commerce Department said the economy grew at a 2.5% annual pace in the final three months of 2006, slightly faster than the previous estimate of 2.2%. Economists surveyed by MarketWatch were expecting the 2.2% estimate to be unrevised.
Even if backward looking, the report proved soothing for a market which has been rocked by concerns about waning economic growth amid a stumbling housing market and a meltdown in the subprime mortgage market.
In addition, seasonally-adjusted initial claims for unemployment fell by 10,000 to 308,000 in the latest week.
On Wednesday, stocks closed sharply lower after Federal Reserve Chairman Ben Bernanke reiterated concerns about inflation, disappointing investors hoping that weaker growth would soon push the Fed closer to cutting interest rates.
"Gentle Ben is no more," said Marc Pado, market strategist at Cantor Fitzgerald, in a note. "Fighting inflation is job #1 at the Fed.," Pado said. "Housing is the biggest threat to the economy. And, the Fed's hands are tied."
Other markets
Crude-oil futures continued to climb, with crude rising 19 cents at $64.27 a barrel. But the market seemed less volatile than in previous sessions. Iran has offered to let the U.K. visit the 15 British troops captured last week, though it still called for Britain to admit they entered Iran's territorial waters.
April gold futures remained down, $2.20 to $670.70 an ounce, as the dollar strengthened following the GDP revision.
Merger news
Of companies in focus, Bell Canada owner BCE jumped 5.2%. The company may receive Canada's largest-ever takeover bid from a group led by Kohlberg Kravis Roberts, according to report in the Globe and Mail newspaper. The bid could be worth over $25 billion.
In other merger news, U.S. Steel rose 2% after saying it was buying Lone Star Technologies for $2.1 billion, or $67.50 a share. The per-share bid represents a 39% premium to Wednesday's closing price. Lone Star jumped 37%.
RF Micro Devices fell 9.6% after the mobile phone parts supplier expects a sequential fall in first-quarter revenue, earnings and margins due to slower demand from aunnamed top-tier customer. Motorola recently issued a profit warning over handset sales.
Chip maker Altera rose 1.4% after a new share buyback plan was announced alongside a 4 cents a share dividend.
Broker A.G. Edwards rose 2.7% after reporting fourth-quarter earnings that topped expectations.
By Nick Godt