Market Snapshot: U.S. stocks rise in volatile trade as buyers find bargains

Feb.07, 2008 in Market Outlook

U.S. stocks edge higher as indecision reigns

By Kate Gibson, MarketWatch

Last Update: 3:47 PM ET Feb 7, 2008

NEW YORK (MarketWatch) — U.S. stocks tilted slightly higher Thursday, with
investors reluctant to extend losses for a fourth day straight, as bargain
hunters limited earlier declines fueled by anemic retail sales and Cisco Systems
Inc.’s disappointing forecast.

In choppy trading, the Dow Jones Industrial Average ($INDU) rose 14.2 points to
12,221.3, with 19 of its 30 components trading higher, led by Home Depot Inc.
(HD), up 3%.

Fronting blue-chip declines was Hewlett-Packard Co. (HPQ), shares of which
recently were off 3.5%.

Also among the blue chips, shares of Wal-Mart Stores Inc. (WMT) turned heel on
earlier declines, climbing 2%. The company was among a slew of U.S.-based
retailers reporting a miserable start to the year. Read more
Click for Detail.

Down earlier on, Cisco Systems Inc.’s (CSCO) shares gained 0.6%, after the
networking giant forecast 10% revenue growth in the fiscal third quarter, against
the 15% growth rate that analysts had expected. The company’s profit for the
latest quarter rose 7%.

“The Cisco earnings and weaker-than-expected Wal-Mart sales were the early
downside catalysts,” said Elliot Spar, option/market strategist at Stifel
Nicolaus & Co.

The broader indexes also advanced.

The S&P 500 Index ($SPX) gained 9.26 points to 1,335.71, while the tech-heavy
Nasdaq Composite Index (COMP) rose 12.12 points to 2,290.87 — after earlier
entering bear-market territory, down more than 20% from its end of October peak.

Microsoft Corp. (MSFT) fell 1.1% as the software giant awaits word from Yahoo
Inc. (YHOO) on its $44.6 billion acquisition bid. Shares of Yahoo were up 1.8%.
Read more about the potential deal
Click for Detail.

“There are a lot of deep discounts, and value buyers are out there,” said Anthony
Conroy, managing director and head trader for BNY ConvergEx Group.

“Historically, stocks are priced at 18 to 24 times earnings, and stocks are
priced at about 14 to 15 [times earnings] right now; when you look at those
numbers, there is a compelling reason to buy stocks,” he added.

“The more you see the risk-arbitrator guys come in and deals being done, people
start making assumptions of what is the next group to be bought,” said Conroy.

Information-technology services provider Electronic Data Systems Corp. (EDS) sank
8.3% in the aftermath of lackluster fourth-quarter results reported after
Wednesday’s close. See full story.
Click for Detail

Volume on the New York Stock Exchange topped 1.4 billion shares, with advancing
stocks edging ahead of those declining more than 5 to 3. On the Nasdaq, nearly
2.6 billion shares exchanged hands, and advancing stocks topped decliners nearly
4 to 3.

On Wednesday, stocks closed with losses for a third consecutive day after a
Federal Reserve official indicated that inflation worries could serve to limit
future interest-rate cuts. See related story.
Click for Detail

Crude moves

In commodities, crude futures also reversed course, erasing earlier declines, as
the benchmark contract traded up 97 cents at $88.11 a barrel on the New York
Mercantile Exchange. See Futures Movers
Click for Detail.

Gold futures for April delivery gained $5 to $910 an ounce. Read Metals Stocks
Click for Detail.

Thursday data included a report from the National Association of Realtors, which
said sales of existing homes fell 1.5% in December, marking a second monthly
drop. Read more
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“The data are worse that forecast, but not really a surprise as the housing
market remains weak and looks to remain so through at least midyear, with many
economists not seeing much stabilization until later this year,” said analysts at
Action Economics.

And, the Federal Reserve reported U.S. consumers took on more debt in December,
increasing their credit-card balances, with the increase proving less than many
economists had expected. See Economic Report
Click for Detail.

Before the opening bell, the Labor Department announced that first-time jobless
claims fell last week but also revised the prior week’s count higher, with
continuing claims stood at their highest level in more than two years. Read
Economic Report
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