Stock prices seesawed throughout the day on Thursday as investors focused on negotiations in Washington, D.C., to resolve the "fiscal cliff" issue.
The Dow Jones Industrial Average finished with a gain of 36.71 points at 13,021.82. The Nasdaq Composite Index was up 20.25 points to 3,012.03, and the S&P 500 Stock Index rose 6.02 points to 1,415.96.
The day’s economic news was mostly positive. The Commerce Department reported the nation's gross domestic product rose 2.7 percent in the third quarter, revised higher from the initial reading of 2 percent. Also, initial claims for jobless benefits fell by 23,000 to 393,000 as the Northeast began to recover from Superstorm Sandy.
Gold rose $10.70 to $1,727.20 an ounce, while oil rose $1.58 to $88.07 a barrel.
All 10 groups in the S&P 500 rose as commodity producers rallied. Apple Inc. (Nasdaq: AAPL) and Advanced Micro Devices Inc. (NYSE: AMD) led an advance in technology stocks. Kroger Co. (NYSE: KR) jumped 4.8 percent after boosting its profit projection for the year. Walt Disney Co., the world’s largest entertainment company, added 1.1 percent after raising its dividend. Tiffany & Co. (NYSE: TIF) tumbled 6.2 percent after cutting its profit forecast. Kohl’s Corp. (NYSE: KSS) plunged 12 percent after reporting disappointing sales for November.
“There’s going to be increasingly divisive negotiations that might shake the market’s confidence a bit,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said in a telephone interview. “We might see a lot of volatility.”
Equities briefly erased gains after Speaker of the House John Boehner said to reporters in Washington Thursday that “no substantive progress” has been made in budget talks. Senate Majority Leader Harry Reid said Democrats were all on the same page on budget talks and Sen. Chuck Schumer said there has been progress, helping the market recover after Boehner’s comments.
Stocks have been whipsawed amid lawmakers’ comments on whether an agreement can be reached to avert more than $600 billion in spending cuts and tax increases scheduled to begin on Jan. 1.
The S&P 500 rose Wednesday after comments by Boehner and President Barack Obama fueled optimism that a deal would be made before the end of the year. The benchmark gauge of U.S. stocks has declined 0.9 percent since the president won re-election on Nov. 6.
Obama reached out to chief executives and middle-income taxpayers Wednesday, imploring them to press Congress to avoid the fiscal cliff as he said he wants to get a deal “done before Christmas.” Treasury Secretary Timothy F. Geithner arrived at the Capitol on Thursday to face demands from Republican leaders to spell out spending cuts. He began his round of meetings with each of the top four leaders in Congress in Reid’s office.
“Equity markets will be very beholden to the incremental statements regarding the fiscal cliff, either progress or lack of progress,” Jim Russell, the Cincinnati-based chief equity strategist at U.S. Bank Wealth Management, which oversees about $113 billion, said in a telephone interview.
Goldman Sachs Group Inc.’s (NYSE: GS) David Kostin wrote in a report that stocks will outperform Treasuries next year as S&P 500 sales and profit growth boost the price-earnings multiple. “The turbulent political environment that curtailed corporate risk- taking in 2012 will end,” Kostin, chief U.S. equity strategist at the New York-based firm, said.
Stocks gained earlier as a report showed Americans signed more contracts in October to purchase previously owned homes, another sign the recovery in the housing market is being sustained. The index of pending home resales climbed 5.2 percent, exceeding the highest estimate in a Bloomberg survey of economists, to 104.8, figures from the National Association of Realtors showed Thursday in Washington. The median forecast in the Bloomberg survey called for a 1 percent gain.
Technology companies also advanced, increasing 0.4 percent.
Research In Motion Ltd. (Nasdaq: RIMM) added 4 percent to $11.54 as Goldman Sachs upgraded the BlackBerry maker to "buy" from "neutral," saying the new BlackBerry 10 phones could help it return to profitability in fiscal 2014.
Pandora Media Inc. (NYSE: P) increased 7.5 percent to $8.79. Cannacord Genuity Ltd.’s Michael Graham, who rates the biggest online radio service with a "buy," said Apple’s recent management changes may slow the development of the iPhone maker’s competing Internet radio.
Supervalu Inc. (NYSE: SVU) sank 19 percent, the most since July, to $2.28. Cerberus Capital Management LP’s pursuit of the grocery-chain operator has stalled because the private-equity firm has had trouble obtaining the funds for a leveraged buyout, said people familiar with the matter. Potential lenders are balking because they’re concerned over how the Eden Prairie, Minn.- based chain will manage the increased debt load as revenue shrinks, said the people.
Aeropostale Inc. (NYSE: ARO) dropped 5 percent to $13.42 after the teen-apparel retailer projected fourth-quarter earnings per share of 36 cents to 41 cents, compared with the average analyst estimate that called for 55 cents. CEO Thomas Johnson said Black Friday weekend sales were “encouraging,” while he remains “cautious” for the rest of the quarter.