AP Business Writer
Stocks rose moderately Thursday as Wall Street balanced enthusiasm about robust consumer spending figures with disappointment in Google Inc.'s profit report, which dragged on technology stocks.
The muted performance followed Wall Street's best day of the year on Wednesday, when it advanced sharply after the
Federal Reserve signaled the economy remained solid and that inflation was largely in check. The central bank's comments, which followed its decision to leave short-term interest rates unchanged, injected a bit of confidence into an uncertain Wall Street. The first month of the year had revealed investor uneasiness about whether stocks were poised to climb higher from sharp gains seen in 2006 or whether the Fed and a drop corporate profits would bring an unceremonious end to the party.
Economic data continued to play a big role in trading, as it has all week. As expected, consumer spending in December showed its biggest increase in five months, rising 0.7 percent.
"It seems to me the Fed is on hold for the foreseeable future and stocks are taking solace in that," said Brian Levitt, corporate economist for OppenheimerFunds Inc. While he expects the Fed is most likely to leave rates unchanged in 2007, he said that if it did make a move the central bank would be more likely to raise rates than lower them.
In midday trading, the Dow Jones industrial average was up 16.74, or 0.13 percent, at 12,638.43, inching further into record territory.
Broader stock indicators were higher. The Standard & Poor's 500 index was up 3.75, or 0.26 percent, at 1.441.99, and the Nasdaq composite index was down 1.39, or 0.06 percent, at 2,465.32.
The sharp gain Wednesday followed by a session of largely modest bets Thursday mirrors what has occurred frequently on Wall Street in recent months: Investors climb a few steps before pausing to catch their breath. Such consolidations, however, are often welcomed as they can signal investors are being cool-headed in their decisions and not simply chasing momentum as they bid stocks stocks higher.
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.83 percent from 4.82 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
Light sweet crude rose 1 cent to $58.15 per barrel on the New York Mercantile Exchange.
In other economic news, the Labor Department reported that the number of newly laid off workers seeking unemployment benefits fell by 20,000 last week to 307,000. The figure pushed the four-week average for claims to the lowest level in a year. The reading also bolstered investor confidence for the January unemployment report, which is due Friday.
Levitt noted low unemployment coupled with forces such as unseasonably warm weather have given a boost to the economy.
"These are things that promote the consumer to go out and spend. I think the key is employment. You have a U.S. consumer that has a job and is making money," he said, adding that low unemployment is central to a continuation of robust consumer spending and therefore further advances on Wall Street.
As consumer spending accounts for more than two-thirds of economic activity, Wall Street attempted to look past the Institute for Supply Management's January reading on the manufacturing sector. The index fell to 49.3 from 51.4 in December, a weaker-than-expected reading. The manufacturing sector has been giving off more signs of weakness than the service sector. Also, pending home sales for December were higher, suggesting a stabilizing in the home sector, according to the National Association of Realtors.
Technology stocks got a boost Thursday from news that Dell Inc. founder Michael Dell would resume his role as chief executive to help the computer maker boost sales and to increase investor confidence. Kevin Rollins was CEO for four years. Dell was up 29 cents at $24.51.
Google Inc. posted a sharp increase in profits, though investors used to outsize gains weren't wowed. The stock was off $8.61 at $492.89.
Exxon Mobil Corp. turned in a profit of $39.5 billion for 2006, the largest ever for a U.S. company, even as fourth-quarter profits slipped 4 percent. Likewise, revenue rose to $377.64 billion for the year, surpassing the record $370.68 billion the company reported in 2005. Exxon rose 60 cents to $74.69.
Archer Daniels Midland Co. rose $3.04, or 9.5 percent, to $35.04 after earnings at the largest U.S. food processor increased 20 percent amid a jump in profits from processing corn.
ON Semiconductor Corp. jumped 97 cents, or 11.6 percent, to $9.33 after the company posted a hefty increase in fourth-quarter profits.
International Paper Co. rose 20 cents to $33.90 after the paper and packaging maker reported that it swung to a profit from a loss in the fourth quarter, aided in part by the sale of assets.
Comcast Corp. fell $1.52, or 3.4 percent, to $42.83 after the nation's largest cable television operator's fourth-quarter profit came up short of Wall Street's forecast. Profits nearly tripled as revenue rose 30 percent.
Advancing issues outnumbered decliners by about 2 to 1 on the
New York Stock Exchange, where volume came to 795.6 million shares.
The Russell 2000 index of smaller companies was up 3.86, or 0.48 percent at 804.20. The average first broke the 800 mark Wednesday.
Overseas, Japan's Nikkei stock average closed up 0.78 percent. Britain's FTSE 100 finished up 1.28 percent, Germany's DAX index closed up 0.92 percent, and France's CAC-40 rose 0.96 percent.