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Markets Rise Despite Disappointing Retail Data

Investors ignored bleak reports from Wal-Mart and Federated Stores to send key indexes higher.
Stocks pushed higher Thursday as oil prices slipped back after rising above $45 per barrel for the first time since Aug. 25. Retailers reported bleak revenue numbers, and the Bureau of Labor Statistics revised official data to show a decline in hourly compensation, but stocks held on to gains.

In the tech sector, investors were waiting for Intel's midquarter update after the closing bell as a guideline to indicate whether the technology sector is in for more disappointment. Intel has long been the barometer for the wider tech sector, not only semiconductor companies. Intel said after the bell that it expects revenue for the third quarter to come in at between $8.3 billion and $8.6 billion, compared with the previous range of $8.6 billion to $9.2 billion.

Based on Intel's news, "I would expect the market to open down pending anything widely different on their conference call," Kevin Rottinghaus, an analyst at First Tennessee National Midwest Research, told InformationWeek. "It's an indication that IT spending isn't bouncing back as it should. I expect it to affect all of tech."

In retail, analysts had expected little performance. But results released Thursday for August sales from Wal-Mart and Federated Department Stores came in lower than expected. The back-to-school sales season typically peaks in August and is considered the second-most-important period, following the Thanksgiving to Christmas holiday season. Wal-Mart said August same-store sales increased just 0.5%, below analysts' expectation, and revised its outlook for third-quarter earnings, putting estimates at the low end of its growth forecast. Same-store sales for Federated, owner of Macy's and Bloomingdale's, fell 2.4%. The company had forecast unchanged sales.

Thursday's report from the Bureau of Labor Statistics is the latest to raise concerns about consumer spending, which drives two-thirds of the economy. The department reported revised productivity data for the second quarter of 2004. The revised official data released Thursday showed that hourly compensation, adjusted for the rise in consumer prices, fell 0.4% in the second quarter of 2004, after declining in the first quarter by 1.6%.

But investors took the soft sales growth at retailers largely in stride. The InformationWeek 100 index rose 3.63 points, or 1.3%, to close at 285.43, while the Nasdaq composite rose 23.02 points, or 1.2%, to 1,873.43. The Dow rose 121.82 points, or 1.2% to close at 10,290.28; the S&P 500 rose 12.40 points, or 1.1%, closing at 1,118.31. The Nasdaq-100 tracking stock closed at $34.77, up 50 cents, or 1.5%, on volume of more than 76 million shares.

See the full listing of all the companies in the InformationWeek 100 and the top 5 percentage winners and losers for the last closing here.