NEW YORK – Stocks rose cautiously Thursday after a court gave a boost to Altria Group (MO), but technology shares were weighed down by warnings from Applied Materials and Google.
The Dow Jones industrial average (search) gained 22.98 points, or 0.22 percent, to finish at 10,572.55. The Standard & Poor's 500 Index (search) closed up 1.61 points, or 0.14 percent, to close at 1,183.55. The technology-laced Nasdaq Composite Index (search) rose 4.60 points, or 0.22 percent, to 2,104.28, its highest close since January.
Stocks have trended higher since the election, rising from the year-lows hit in October.
"This is a continuation of the rally we've seen recently," said Tom Schrader, managing director, U.S. equity trading at Legg Mason Wood Walker in Baltimore.
"There's money out there to be spent on stocks. People were holding money back before the election ... but now we're continuing to see more and more money in the market. Oil continues to help -- energy prices are trending down."
Altria Group Inc., parent of cigarette maker Philip Morris USA (search), helped support the Dow, rising 2 percent after Goldman Sachs and Prudential upgraded the stock. The upgrades came a day after a federal appeals court panel questioned whether the government had the authority to force cigarette makers to pay billions of dollars as part of its racketeering case against the industry. Altria, the largest tobacco company, climbed $1.28 to $58.70.
"Goldman upgraded Altria this morning because of the sooner-than-expected resolution of the class-action lawsuit, which removes the legal overhang out of the way," said Neil Massa, senior trader at John Hancock Funds.
Rival tobacco company Reynolds American Inc. (RJR), the maker of Camel cigarettes, jumped $2.19, or 3 percent, to $77.80.
NYMEX crude for December delivery fell 62 cents to settle at $46.22 a barrel, as traders booked profits from a heating-oil inspired rally on Wednesday. The decline in oil prices especially helped industrial stocks such as Caterpillar Inc., up 56 cents at $91.44.
But McDonald's (MCD) dragged on the Dow, falling 45 cents, or 1.5 percent, to $29.95, and shares of other hamburger chains declined after the U.S. government said first-round screening tests returned "inconclusive" results for mad cow disease in one animal.
Applied Materials (AMAT), the largest producer of chip-making equipment, said Wednesday quarterly profit rose, but it warned that an oversupply of chips would slow sales in the current quarter. Applied Materials reversed an earlier drop to rise 31 cents, or 1.8 percent, to $17.65.
While Applied Materials' forecasts were understandable given high inventories in semiconductors, Google's warning that its current strong profits were unsustainable in future quarters surprised some investors.
Google (GOOG) slipped $4.96, or almost 3 percent, to $167.54 after the company said that the strong growth it experienced in 2004 may not be sustainable in the year ahead due to increased competition and its own climbing revenues. The company went public in August at $85 per share.
Economic news was mixed. The index of leading U.S. economic indicators fell for a fifth straight month in October, according to The Conference Board (search). Meanwhile, output growth at U.S. Mid-Atlantic factories eased in November, but still suggested the manufacturing sector was operating at a healthy clip, according to a report from the Federal Reserve Bank of Philadelphia.
Stocks also saw pressure from the currency markets, as the U.S. dollar fell to a new low against the euro as foreign exchange traders worried about the U.S. trade and budget deficits, along with high oil prices.
Meanwhile, Friday is the last trading day for November individual equity options and some options on November stock indexes, which can cause volatility in the days preceding as traders close out their positions ahead of the contract expiration.
Colgate-Palmolive Co. (CP) weighed on the S&P 500, falling $1.82, or 3.7 percent, to $46.92 after Banc of America Securities analyst William Steele cut his rating to "neutral" from "buy" on the consumer products maker's stock.
Oracle Corp. (ORCL) slipped 16 cents to $12.97 after issuing a letter to PeopleSoft Inc. shareholders, urging them to accept the company's "best and final offer" of $24 per share in Oracle's takeover bid. Oracle said it would withdraw its bid for the rival database company at midnight on Friday. PeopleSoft rose 7 cents to $22.89.
In earnings news, Limited Brands Inc. (LTD), operator of the Limited, Express and Victoria's Secret stores, said its profits fell from a year ago due to fewer one-time gains. The company's earnings were in line with Wall Street expectations, but its revenues were slightly below forecasts. Limited Brands was down 4 cents at $27.06.
Trading was active, with 1.46 billion shares changing hands on the New York Stock Exchange, just above the 1.4 billion daily average for last year. About 1.95 billion shares were traded on Nasdaq, above the 1.69 billion daily average last year. Advancers and decliners were about even on the NYSE and on Nasdaq.
The Russell 2000 index of smaller companies was down 0.91, or 0.15 percent, at 622.06.
Overseas, Japan's Nikkei stock average fell 0.44 percent. In Europe, Britain's FTSE 100 closed up 0.2 percent, France's CAC-40 dropped 0.36 percent for the session, and Germany's DAX index lost 0.11 percent.
Reuters and the Associated Press contributed to this report.