NEW YORK – U.S. stocks rose Thursday, with the Nasdaq up more than 1 percent, as a big drop in oil prices boosted optimism about corporate profits and a brokerage raised its profit forecasts for chip maker Intel Corp.
The Dow Jones industrial average gained 6.17 points, or 0.05 percent, to end at 12,480.69. The Standard & Poor's 500 Index added 1.74 points, or 0.12 percent, to finish at 1,418.34. The Nasdaq Composite Index climbed 30.27 points, or 1.25 percent, to close at 2,453.43.
Positive comments from analysts on Intel (INTC) and biotech company Amgen Inc. (AMGN) helped boost stocks in the technology and health sectors. Analysts said the sectors may look more attractive after being the two worst-performing groups in 2006.
"For technology compared to other sectors, earnings growth looks pretty robust for 2007 and that hasn't been true for a long time," said Gail Dudack, chief investment strategist at Dudack Research Group in New York. "What's happening to commodities is also a major impact on the market. As long as commodity prices are going down, particularly crude oil, that has to be good for stocks."
Stocks recovered from early losses after weekly oil inventory data showed a larger-than-expected rise in U.S. gasoline stockpiles, extending a loss in crude futures from the previous session to cause its biggest two-day percentage loss in more than two years. U.S. crude oil for February delivery fell $2.73, or 4.7 percent, to settle at $55.59 a barrel.
Weaker energy prices are often deemed positive for stocks because they reduce costs for companies and consumers, but they drag down shares of energy companies.
Intel helped buoy the Nasdaq and provided the biggest lift to the S&P 500 index, rising 4 percent, or 82 cents, to $21.17, after Banc of America Securities raised its earnings estimates on the company. Intel also was among the Dow's biggest advancers.
"Investors since the July bottom have been willing to take on more risk as evidenced by the Nasdaq, which has led all of the market indices since," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Plymouth, Massachusetts. "It doesn't pay to be bearish this time of year."
Shares of health-care stocks also rallied. Analysts at Bear Stearns raised their investment rating on biotechnology company Amgen Inc. to "outperform." They recommended the same rating for drugmaker Merck & Co. (MRK) on Wednesday. Amgen shares rose 4.3 percent, or $2.93, to $71.33 on the Nasdaq while Merck shares gained 2.5 percent, or $1.09, to $45.11 on the NYSE.
Disappointing retail sales figures, however, worried some investors. Limited Brands Inc. (LTD) posted worse-than-expected December sales, pushing its stock down 7.5 percent, or $2.23, to $27.35. BJ's Wholesale Club Inc. cut its fourth-quarter profit forecast on disappointing holiday sales and margins, sending its stock down 4.1 percent, or $1.31, to $30.55.
But shares of Altria Group Inc. (MO) helped the Dow, with Altria surging to a record high at $87.87 on Thursday as investors waited for the company to announce plans for spinning off its 88 percent ownership stake in Kraft Foods Inc. (KFT) on Jan. 31. Altria shares ended up 1.3 percent, or $1.14, at $87.65 on the NYSE.
On the data front, the Institute for Supply Management's services index edged lower in December, in line with expectations, signaling slower growth in the biggest segment of the economy.
Trading was active on the New York Stock Exchange, where bout 1.74 billion shares changed hands, just below the 1.84 billion daily average for last year.
On the Nasdaq, about 2.19 billion shares traded, above the 2.02 billion daily average last year.
Advancing shares were about even with decliners on the NYSE, with 1,676 stocks rising and 1,700 shares declining. On the Nasdaq, advancers outnumbered decliners by a ratio of about 4 to 3 on the Nasdaq.