Stocks climbed on Thursday, boosted by strong orders for durable goods and a federal panel’s approval of a new key drug of Biogen Inc.
The dollar rose after the Bank of Japan sold the yen for the second day in a row, and gold prices jumped above $320 an ounce for the first time in 2-1/2 years in a safe-haven rally.
”The economic numbers were pretty good,” said Stephen Bliss, co-head of Nasdaq trading for Cantor Fitzgerald. ”There’s optimism that consumer spending will keep the economy plodding along.”
Still, the violence in Israel, a standoff between nuclear powers Pakistan and India and concerns about US vulnerability to more terror attacks unnerved investors and sparked a gold rally. Trading is likely to be light on Friday ahead of the long Memorial Day holiday weekend.
”There’s a heightened awareness of terrorism and the global issues are part of the negative cast. There are all kinds of little hot spots to cause a problem,” said Mike Vogelzang, chief investment officer at Boston Advisors Inc., which has boosted its cash holdings instead of buying stocks amid worries more turmoil could cause stocks to tumble.
The Dow Jones industrial average closed up 58,20 points, or 0,57%, at 10,216.08. The broader Standard & Poor’s 500 Index was up 11,06 points, or 1.02%, at 1,097.08. The technology-laced Nasdaq Composite Index was up 24,18 points, or 1,44%, at 1,697.63.
About 20 stocks rose for every 11 that fell on the New York Stock Exchange, while advancers outpaced decliners by 10 to seven on Nasdaq. More than 1,18-billion shares changed hands on the Big Board, and 1,75-billion on Nasdaq.
Biotechnology shares helped boost major market indexes after a US advisory panel gave its backing for Biogen’s Amevive, a drug to treat the hard-to-cure skin disease psoriasis. The drug is viewed as crucial for the company’s future growth. The Nasdaq did not allow trading in Biogen shares all day.
This was one of the most closely watched drug approvals for one of the country’s biggest biotech companies. The sector has been hit by a wave of FDA product rejections since the start of the year.
Economic data also put the spring back into investors’ steps. US orders for costly manufactured goods jumped 1.1 percent in April, beating analysts’ expectations for a 0.4 percent rise, on the biggest demand for autos in more than three years. Investors had received mixed economic data over the past few weeks, but the robust orders helped boost confidence in the turnaround of the nation’s economy.
However, investors were still nervous about tensions around the world and sought safe havens for their cash.
At the Commodity Exchange, gold for June delivery closed $4,50 higher at $322,80 an ounce. Gold bullion was last at $322,50, up from Wednesday’s New York close at $318,35. It topped at $323,60, the highest since Oct. 13, 1999.
Shares of gold companies also gained as investors bet that higher gold prices would drive up corporate profits. Barrick Gold advanced 48 cents, or 2,1%, to $23,16, while Placer Dome Inc. advanced 50 cents, or 3,6%, to $14.38.
US Treasuries rose for the fourth straight session.
”There are terrorism concerns, war in the Mideast and tensions between India and Pakistan — just name your hot spot,” said Bruce Simon, chief investment officer at Glenmede Trust Co.
Simon said his firm has raised its cash holding in some funds to about nine percent from five percent and has bulked up on defence shares in response to global tensions.
Semiconductor stocks were among the worst performers on the belief prices for technology companies were still too high given the slow economic recovery.
Chipmaker Intel Corp. dropped 20 cents to $29,39, while chip equipment maker Applied Materials lost 59 cents to $25.57.
”I wouldn’t recommend buying Intel here,” Simon said.
Graphics chip designer Nvidia Corp. fell $2,32, or six percent, to $35,73. The company reported strong quarterly earnings, but a run-up in the stock prior to the report and guidance that may have been weaker-than-expected hurt the shares. The stock had surged about 21% from May 6 to Wednesday’s close.
Qwest Communications International Inc. reversed early declines to rise seven cents to $5,10. Standard & Poor’s cut its ratings to ”junk” status, saying the number four US local phone company may have trouble fending off competition.
WorldCom Group gained 14 cents, or 8,5%, to $1,79 after the number two US long-distance telephone and data services company said it secured $1,5-billion in new funding, giving it additional breathing room as it works to restructure its balance sheet.
Adelphia Communications Corp. resumed trading after being halted for several sessions. It tumbled $3,08, or 54%, to $2,62 after the cable company said the Rigas family agreed to relinquish control of the company they founded and transfer assets valued at more than $1-billion.
Ciena Corp. sank 36 cents to $6,08. The optical networking company posted a quarterly net loss on plunging sales, due to lower spending by its telephone carrier customers.
At 5 pm EDT (1900 GMT), two-year notes were down 3/32 to 100-8/32, yielding 3,23%. Five-year notes fell 3/32 to 99-21/32, yielding 4,45%. Benchmark 10-year notes fell 8/32 to 97-29/32, yielding 5,15%, and 30-year bonds were down 12/32 to 95-26/32 to yield 5,67%.
The dollar rose to 124,96 yen from 124,10 yen late Wednesday. The euro settled at 92,12 cents, down from 92,56 cents.
Overseas, London’s FTSE 100 index closed up 23,4 points, or 0,45%, at 5,175.3, some 20 points off its high for the day. In Tokyo, the Nikkei average jumped above the key 12 000 mark for the first time since March 11, before ending up 0,15%, or 17,87 points, at 11,979.85, its best finish since August 8. – Reuters