U.S. stocks close higher on tech, Cisco
SAN FRANCISCO (MarketWatch) -- U.S. stocks posted their best day in two weeks Thursday as gains in the tech sector and reassuring comments from German Chancellor Angela Merkel countered disappointing regional manufacturing data.
Cisco shares closed up 9.6% as the stand-out leader on the Dow. The network-equipment maker late Wednesday reported better-than-expected first-quarter results and unveiled a plan to raise its quarterly dividend by 75%. Read more on Cisco.
The tech-heavy Nasdaq Composite Index (COMP) was up 31.46 points, or 1%, to close at 3,062.39.
On the other side of the tech coin, it appeared as if more
The S&P 500 (SPX) rose 9.98 points, or 0.7%, to 1,415.51, with the tech sector closing up 1.5%. At current levels, both the Dow and the S&P 500 are on track to post six consecutive weeks of gains, and the Nasdaq is looking at five weeks of gains in a row.
Stocks got an added boost as Germany's Merkel said during a trip to Canada that Europe's largest economy was committed to maintaining the euro. Read more on Merkel comments.
But the gains can be deceiving seeing that equity markets are also mired in one of the longest low-volume stretches of the year.
By the close, just over 3 billion NYSE-listed shares had exchanged hands, following four days of sub-3 billion-share daily volume. August daily trading volume has averaged 3.31 billion shares for NYSE-listed shares, according to Barclays.
In contrast, Nasdaq volume was slightly above average with just over 1.9 billion Nasdaq-listed shares trading, compared with an August average of 1.67 billion shares. Read more on August's super-light trading volumes.
"Clearly, markets had a bit of a bid, but I'm not looking for much follow-through," said Scott Wren, senior equity strategist at Wells Fargo Advisors. "This looks like the calm before the storm."
With an S&P 500 target of 1,400 to 1,450 by the end of the year, Wren is looking for another 5% to 10% pullback in stocks this year before he starts talking to his retail investors about buying opportunities. He did not place much faith in today's market moves being connected to economic data given the light volume.
But don't discount the data altogether. Building permits in July rose to their highest rate since August 2008, even though housing starts retreated. Read more on housing data.
"Building permits are important," said Russ Koesterich, global head of investment strategy for iShares at Blackrock. "They're helpful because they're a leading indicator and suggest that housing is mending, mitigating the risk of a further slip in the economy."
But, it's mainly a "dearth of headline risk" this month that's taking some of the pressure off the equity market, Koesterich said. The real challenge to markets will come in September, which has a statistically significant negative market bias, he said. In mid-September, the Federal Reserve holds its next Federal Open Market Committee and a German court decides whether the European Stability Mechanism is constitutional under German law.
Earlier in the session, stocks retreated to intraday lows after the Philadelphia Federal Reserve said its manufacturing index was negative for the fourth straight month, with a reading that fell short of forecasts. Read more on Philly Fed.
Also, U.S. jobless claims came out slightly higher from last week. Read more on weekly jobless claims.
Providing some market support, a Chinese government website published Chinese leader Wen Jiabao's comments that subsiding inflation pressures leave the government scope to further ease monetary policy. Read: China FDI data signal flagging confidence.
Advancing stocks outnumbered decliners by a little over 2 to 1 on the NYSE and the Nasdaq. Advancing volume made up 75% of NYSE volume, and 71% of the Nasdaq's.