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Stocks up on guarded optimism
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NEW YORK (MCT) – U.S. stocks gained Thursday, with the S&P 500 extending its advance into a fourth day, as investors held out hopes that Europe would muddle through its debt troubles.
“You can see what kind of tenterhooks we’re on,” Sandy Lincoln, chief market strategist at BMO Asset Management, said of the factors underlying market sentiment.
“We’re breathing pretty shallow until we get developments on both fronts,” he added, pointing to corporate results and, in particular, guidance, along with aggressive enough steps by European leaders to assuage worry about the ramifications of the region’s debt crisis.
“Stronger moves by the (European Central Bank) would be one, then maybe the market would give Europe some time to heal some of the wounds,” Lincoln said.
The Dow Jones industrial average rose 21.57 points, or 0.2 percent, to 12,471.02, with Chevron Corp. the greatest weight among the blue chips after the oil giant warned it expects fourth-quarter 2011 earnings to be substantially under the prior quarter.
JPMorgan Chase & Co. edged up 0.5 percent ahead of its earnings report on Friday.
The S&P 500 index added 3.02 points, or 0.2 percent, to 1,295.50.
Seven of the index’s 10 industry groups advanced, with materials up the most and energy taking the hardest hit.
Up for a sixth day, the Nasdaq composite rose 13.94 points, or 0.5 percent, to 2,724.70.
It was the index’s longest streak of gains since an eight-day streak ended July 7.
Oil futures declined $1.77 to finish at $99.10 a barrel in New York, with the commodity taking a late-session hit after Bloomberg News reported a European Union embargo of Iranian oil could be delayed up to six months.
Equities cleared losses that came with disappointing domestic data, with retail sales rising less than thought in December and weekly jobless claims climbing more than anticipated.
The Labor Department reported jobless claims rose by 24,000 to 399,000 last week, while retail sales rose 0.1 percent in December, with stock-index futures trimming their rise after the reports.
“The data may curb some enthusiasm for U.S. growth resurgence, as there were three elements that helped drive optimism towards the end of the year _ jobs, retail spending and housing, and today’s data took a whack at two of them,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
“I don’t think they are mortal wounds,” he added.
European Central Bank President Mario Draghi said eurozone debt markets remain at risk but some recent liquidity measures were helping. The ECB head spoke to reporters after the central bank held interest rates unchanged after two consecutive cuts, with recent illustrations of some economic strength in the region allowing the central bank to keep its benchmark rate at 1 percent.
A drop in borrowing costs at debt auctions in Europe fostered optimism, with Spain selling 10 billion euros, or $13 billion, in bonds, double the goal for the auction. Italy sold 12 billion euros, or $15 billion, of bills, offsetting worries it would face an uphill battle to finance its debt.
On Wednesday, U.S. stocks recovered the bulk of their losses, leaving the S&P 500 stalled at five-month highs, with investors torn between optimism on the U.S. economy and Europe’s debt troubles.
“This rally is all about building a buffer. Until the U.S. has a budget and tax plan for 2012 and Europe forms a new treaty that assigns and funds a bailout program, the bulls can only rattle the cage,” Marc Pado, U.S. market strategist at Cantor Fitzgerald, wrote in emailed commentary.