NEW YORK (Reuters) - Stocks rose on Thursday, after government leaders agreed on a plan for tax rebates to stimulate the U.S. economy and a healthy outlook from cell- phone chip maker Qualcomm helped drive the Nasdaq up sharply.
Concerns that the economy is on the verge of recession eased after Congress and the White House agreed on the outlines of an economic stimulus package that would give 117 million U.S. families a tax rebate.
The quick agreement, less than a week after President Bush said a proposal was in the works, helped stocks extend Tuesday’s rally. It marked only the second time the market has achieved back-to-back gains this year.
Technology shares surged after Qualcomm Inc (QCOM.O) posted a rise in quarterly profit and relieved investors by signaling that the mobile phone market was still vibrant even though the economy was slowing.
“Investors are encouraged (legislators) came up with an agreement in principle, in a quick fashion,” said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore.
The Dow Jones industrial average .DJI gained 108.44 points, or 0.88 percent, to settle at 12,378.61. The Standard & Poor's 500 Index .SPX advanced 13.47 points, or 1.01 percent, to 1,352.07. The Nasdaq Composite Index .IXIC shot up 44.51 points, or 1.92 percent, to 2,360.92.
Qualcomm shares jumped 10.3 percent to $40.41 and led the Nasdaq’s major advancers.
After the closing bell, shares of Ambac Financial Group Inc ABK.N surged 15.1 percent to $13.05 after the UK’s Evening Standard newspaper reported that billionaire investor Wilbur Ross is in talks to take over the bond insurer. The stock of another bond insurer, MBIA Inc (MBI.N), also gained.
Shares of software maker and Dow component Microsoft Corp (MSFT.O) jumped more than 4 percent to $34.70 as the company posted a quarterly profit that handily beat Wall Street’s forecasts. Its shares had ended at $33.25, up 4.1 percent on the Nasdaq.
During the regular session, another bright spot was Thursday morning data showing the number of U.S. workers applying for jobless benefits last week fell unexpectedly to a four-month low, suggesting the labor market remained stable even as the economy slowed.
XEROX RALLIES, eBAY SLIDES
In other earnings news, shares of Xerox Corp (XRX.N), the leading provider of digital printers and document management services, surged 8.2 percent to $14.33 after it posted a stronger-than-expected rise in quarterly profit and said it was on track to meet its 2008 full-year profit forecast.
Lockheed Martin Corp (LMT.N) shares climbed 3.8 percent to $105.90, after the defense contractor reported a quarterly profit and raised its full-year forecast.
On the downside, eBay Inc (EBAY.O) shares fell 6.1 percent to $27.18 and kept gains in the Nasdaq and the S&P in check. The Internet auctioneer and retailer warned about its profit outlook late on Wednesday.
Earnings have been “a bit of a mixed bag, but there have been no shockingly alarming surprises to the downside, and that’s good news,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
On Wednesday, stocks snapped a five-day losing streak.
But the start of 2008 is still set to be one of the bumpiest of any year for Wall Street.
Trading was heavy on the NYSE, with about 2.18 billion shares changing hands, above last year’s estimated daily average of roughly 1.9 billion, while on the Nasdaq, about 2.96 billion shares traded, exceeding last year’s daily average of 2.17 billion.
Advancing stocks outnumbered declining ones by a ratio of about 5 to 3 on the NYSE and by 4 to 3 on Nasdaq.
Editing by Jan Paschal