Investors picked up consumer staples and industrials stocks today but remained cautious after getting more evidence that the economy is still struggling.
Investors picked up consumer staples and industrials stocks today but remained cautious after getting more evidence that the economy is still struggling.
Money flowed into stocks like Procter & Gamble Co. seen as better able to weather a recession but technology shares slumped after Intel Corp.'s tightlipped forecast caused jitters about a corner of the market that has been drawing in buyers over the past month.
In early afternoon trading, the Dow Jones industrial average rose 70.25, or 0.9 percent, to 7,990.43.
More stocks rose than fell but the advance was held in check after the government reported that production at the nation's factories, mines and utilities fell 1.5 percent in March, the fifth straight month of decline and worse than the 1 percent dip analysts expected.
The government reported separately that consumer prices fell 0.1 percent last month as a drop in energy prices offset the biggest rise in tobacco prices in more than a decade. It was better than the 0.1 percent rise economists had expected but still reflected weaker business activity.
Traders are hesitant to continue a five-week buying spree that has boosted the market more than 20 percent without more convincing signs that the economy is stabilizing or until companies signal they have seen the worst of a recession now in its 17th month.
David Kelly, chief market strategist at JPMorgan Funds, said it could take months for investors to get a better sense of whether the economy has managed to break its slide. That uncertainty could idle the latest rally.
"It's like April weather," he said. "Some days it will seem an awful lot like winter and other days it will feel like spring."
The Standard & Poor's 500 index rose 4.19, or 0.5 percent, to 845.69. The tech-heavy Nasdaq composite index fell 9.43, or 0.6 percent, to 1,616.29, reflecting disappointment about Intel's report.
About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 633 million shares.
Investors bought industrial stocks after cost-cutting at CSX Corp. helped the railroad operator post better-than-expected earnings for the first three months of the year. The stock rose $2.32, or 8.2 percent, to $30.71.
Consumer staples stocks — considered a refuge during recessions — posted some of the biggest gains. Procter & Gamble, the maker of Tide detergent and Crest toothpaste, rose $1.13, or 2.4 percent, to $48.38 after boosting its quarterly dividend by 10 percent, to 4 cents.
Intel pushed tech companies lower. The chip maker's earnings came in well ahead of expectations and the company said personal computer sales have "bottomed out." Investors were unnerved, though, by Intel's decision not to provide a detailed revenue forecast. The company said the economy makes it too hard to accurately predict results. The stock fell 63 cents, or 3.9 percent, to $15.38.
"We're going to continue to get bad news," said David Hefty, chief executive of Cornerstone Wealth Management in Auburn, Ind. Hefty noted though, that investors are less swayed right now by fundamentals in the economy and more by the momentum of the market.
In a sign of further weakness in the economy, Yahoo Inc. and the troubled Swiss bank UBS are both cutting jobs.
Yahoo is planning to cut several hundred jobs in its third round of big layoffs in 14 months, a person familiar with the plans said. Details of the cuts are unlikely to be released before the company announces first-quarter results next Tuesday. Yahoo slipped 22 cents to $13.85.
UBS said it will cut 8,700 jobs worldwide by the end of next year and expects a first-quarter loss of nearly $1.75 billion.
The UBS results put a damper on improving bank earnings that were seen at Wells Fargo & Co. and Goldman Sachs Group Inc. Both Citigroup Inc. and Bank of America Corp., among the hardest hit by the credit crisis, report first-quarter results within the next week.
In other market moves, the Russell 2000 index of smaller companies rose 3.59, or 0.8 percent, to 456.80.
Bond prices fell, pushing the yield on the 10-year Treasury note up to 2.83 percent from 2.79 percent late Tuesday.
The dollar was mixed against other major currencies, while gold prices rose.
Overseas, Japan's Nikkei stock average fell 1.1 percent. Britain's FTSE 100 fell 0.5 percent, Germany's DAX index lost 0.2 percent, and France's CAC-40 fell 0.5 percent.
