Oil, Trains & Steel Buttress Market Gains

Stocks built on a midmorning turn and marched straight to higher ground. But the upside reversal was only semi-sweet, riding on lower volume.

According to preliminary figures, the Nasdaq closed up 0.9%, the NYSE nailed a 0.7% gain and the S&P 500 notched a 0.6% rise. NYSE volume was off 5%. Nasdaq traded at 2% lower volume.

Crude oil futures jumped 1.84, above $63.85 a barrel, late in the day giving some help to advancing stocks. Railroads, transportation equipment suppliers, steel producers and residential builder industry groups all lodged better than 2% gains.

Perini PCR jumped 1.44 to 41.44 on above-average volume. The stock broke above its 39.11 buy point from a pullback April 4. The heavy construction industry group advanced from 132nd to 62nd in 8 weeks.

Kansas City Southern KSU clicked up 1.46 on heavy volume to 38.01, a new high.

Grant Prideco GRP jumped 1.87 to 52.42. The oil and gas drilling parts and equipment specialist's EPS and sales growth slowed the past three quarters. Its Overall and Fundamental Rantings in the IBD Stock Checkup are the best in its industry group. The company plans to report Q1 results April 24.

On the market's flip side, Energen EGN lost 95 cents to 53.75. The natural gas distributor saw EPS decline in Q4 for the first time since 2005. But that still beat analyst views. For 2007, analysts see 24% growth. Energen has topped views in the past three quarters.

3 p.m. ET update: Stock Rally Slows As Crude Surges

Stocks rallied into the late portion of Thursday's session, though a spike in oil prices seemed to stall stocks' advance.

The intraday action was shaping up as a bullish intraday reversal. However, volume weakened. Nasdaq volume was tracking 4% lower, NYSE volume 13% lower.

Just before 3 p.m. ET, the Nasdaq led the major indexes with a 0.7% gain. The S&P 500 was up 0.4% while the NYSE composite grew 0.6%. A late surge in crude oil futures, putting the price above $66 a barrel, appeared to put pressure on stocks' advance.

Railroad stocks led industry group activity. All 12 stocks in the group were up, as Burlington Northern Santa Fe BNI, Union Pacific UNP and CSX CSX made record highs. The Associated Press quoted analysts saying billionaire Warren Buffett's recent purchase of a large stake in Burlington Northern Santa Fe is lifting the industry.

Elsewhere, JA Solar JASO spanned up 1.63 to 21.14. The move broke the stock above a 21.20 buy point off the left side of a six-week base. Shares were 41% above its February initial offering price. The photovoltaic cell-maker has logged two quarters of accelerating earnings and sales. Solar makers have pushed the Energy-Other sector to 9th from 193rd of 197 industry groups in the past 26 weeks.

Reliance Steel RS rose 1.24 to 52.25. The move pushed the stock 5% above its May 2006 high, following an 11-month, 43% correction. Hemming and hawing pricing and demand for steel slowed Reliance's EPS growth from 88% in Q3 to 8%, well below estimates in Q4. Analysts see 24% growth for Q1.

Jones Soda JSDA gained 1.85 to 24.85, putting it on pace to snap a three-day losing streak. Despite the pullback, shares are more than 60% extended from a 15.38 buy point from a pullback to the 10-week line. The soft drink company was featured in Wednesday's New America section.

On the downside, WellCare Health Plans WCG gapped down, skidding 1.80 to 88.28 on heavy trading. The HMO, however, reversed higher to trim the majority of its earlier loss and appears to remain in its long uptrend.

1 p.m. ET update: Stocks Gain As Investors Digest Mixed Retail News, Q1 Outlooks

Stocks rebounded in morning trading, moving sharply higher as investors weighed positive March retail reports against Q1 profit warnings.

The NYSE and the S&P 500 were up 0.3% at 12:59 p.m. ET. The Nasdaq was up 0.6%. NYSE volume was up 3%. Nasdaq volume was down a fraction.

News of a $5.5 billion acquisition offer by Nestle for baby food maker Gerber, a unit of drug maker Novartis, was fuel for optimists. Rising jobless claims and Wednesday's news that the Federal Reserve remained concerned about rising inflation and hasn't ruled out rate hikes, held optimism in check.

Retailers posted solid March same-store-sales, in a number of cases topping optimistic projections.

Kohl's KSS led the pack with a 17% increase. Nordstrom JWN saw a 15% increase, Saks SKS rose 13% and Target TGT climbed 12%. Wal-Mart WMT handily beat views for 1% to 2% growth with a 4% performance, but warned it would struggle to meet prior guidance for Q1. All those stocks reversed higher and all except Saks were up on the day.

The Labor Department's weekly unemployment claims report showed applications for jobless benefits rose 19,000, to 342,000, last week. The second consecutive increase, it was much larger than anticipated, pushing total claims to the highest level since the week of Feb. 10.

Research in Motion RIMM gapped down and lost 12.14 to 133.88. The BlackBerry maker reported EPS rose 55%, a third quarter of accelerating gains. But sales fell a shade below forecasts and the company reported a Securities and Exchange Commission probe into past stock-option accounting issues had become a formal inquiry.

Burlington Northern Santa Fe BNI jumped 4.48 to 92.13. Shares are up 11% since Berkshire Hathaway BRKA reported April 6 it had established an 11% position in the railroad heavyweight.

Shares of China Life Insurance LFC rose 1.91 to 47.50 after competitor Ping An Insurance reported 2006 earnings soared 86%. The insurers are first and second largest, respectively, in the Chinese market. Ping is not listed on U.S. exchanges. China life is building the right side of a cup-shaped base.

VCA Antech WOOF fetched 1.73 to 39. The veterinary care chain's EPS growth slowed in the past two quarters and sales growth has bobbed in low double-digits. Analysts see 16% EPS growth for 2007. VCA has beat expectations in every quarter since 2004. A Morgan Keegan analyst initiated coverage with a market perform rating April 3.

On the market's slumping side, USANA Health Science USNA lost 4.20 to 41.25. The stock has been sliding since it tanked below its 10-week moving average March 15. The company plans to report earnings April 18.

11 am update: Stocks Hang Slack On Mixed News

Jobs data, mixed retail results and consumer confidence questions shackle trading

Stocks got off to a slack start Thursday, on Q1 profit warnings by retailers, a rise in weekly jobless claims and Q4 sales results by Blackberry-maker Research In Motion RIMM that fell short of analyst expectations.

Yesterday's news that the Fed had not ruled out the possibility of a rate increase sometime this year also hung in the air.

The NYSE composite was flat at 10:40 a.m. ET. The Nasdaq was up 0.1%. The S&P 500 was down less than 0.1%. Nasdaq volume tracked 20% lower. Volume on the NYSE trailed by 14%. Activity on foreign exchanges was mixed.

Retailers posted solid March same-store-sales, in a number of cases topping optimistic projections. Kohl's led the pack with a 17% increase. Nordstrom saw a 15% increase, Saks rose 13% and Target climbed 12%. Wal-Mart handily beat views for 1% to 2% growth with a 4% performance, but warned it would struggle to meet prior guidance for Q1. Three companies warned they would likely miss Q1 forecasts, compounding doubts over consumer confidence.

The Labor Department weekly unemployment claims report showed applications for jobless benefits rose 19,000, to 342,000, last week. The second consecutive increase, it was much larger than anticipated, pushing total claims to the highest level since the week of Feb. 10.

The world's largest food maker, Nestle, announced an agreement to buy baby food maker Gerber from drug maker Novartis NVS for $5.5 billion.

Research in Motion RIMM gapped down and lost 12.14 to 133.88. The Blackberry maker reported EPS rose 55%, a third quarter of acceleration gains. But sales fell a shade below forecasts and the company reported a Securities and Exchange Commission probe into past stock-option accounting issues had become a formal inquiry.

Microstrategy MSTR also gapped down, losing 6 to 118.38. The business intelligence software maker was downgraded to Reduce from neutral by a SunTrust Robinson Humphrey analyst.

Mens Wearhouse MW gapped down losing 3.47 to 43.36. The operator of 627 clothing retail stores was among a group warning of profit finishing at the lower end of Q1 views. Competitor Joseph Bank Clothiers JOSB gapped down, losing 3.16 to 32.38.

On a more positive note, Manor Care HCR jumped 2.49 to 64.17. The move left it 15% above Tuesday's close. The nursing home operator reported Wednesday it had retained JP Morgan to assist in studying strategic options. Bear Stearns upgraded the stock to peer perform Thursday morning.

Copyright 2007 Investor's Business Daily, Inc.