Wall Street edges up as energy rebounds; early earnings weak

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks edged higher on Thursday as a rebound in the price of crude oil lifted energy shares, though strength in the U.S. dollar and uncertainty over the coming earnings season limited the day's gains.

Seven of the S&P 500's ten industry sectors rose on the day, though gains were largely shallow. Markets have struggled for direction of late, with investors seeing limited upside potential in equities, but also few alternatives for yield.

Recent economic data has been mixed, with the stronger numbers backing the idea that the Federal Reserve should begin raising interest rates and weak data possibly indicating less economic readiness for a rate hike. Jobless claims rose in the latest week, though the rise was smaller than anticipated.

 

Alcoa Inc , whose report is considered the informal start to earnings season, fell 3.9 percent to $13.14 a day after it reported revenue that missed expectations. Bed Bath & Beyond , which also reported weaker-than-expected results late Wednesday, fell 6.2 percent to $72.85.

"We're positioned for an upside move as expectations have been lowered to the point where we're set up for a positive surprise, though there is a risk in some of these early reporters setting a negative tone," said Jim McDonald, chief investment strategist at Northern Trust Asset Management in Chicago.

Earnings for S&P 500 companies are now seen falling 2.8 percent in the first quarter, according to Thomson Reuters data, compared with a rise of 5.3 percent that had been forecast on Jan. 1. Strength in the U.S. dollar has been a driving force behind the lowered views, a trend that continued on Thursday. The U.S. dollar index <.DXY> rose 1.2 percent.

The energy sector <.SPNY> climbed 1.2 percent on the back of a 1.7 percent rise in U.S. crude futures . Brent crude jumped 3.2 percent, with both rebounding from a drop of 6 percent on Wednesday, as continued uncertainty about an agreement on Iran's nuclear programme also provided a lift. ConocoPhillips rose 2.6 percent to $66.49.

The Dow Jones industrial average <.DJI> fell 6.41 points, or 0.04 percent, to 17,896.1, the S&P 500 <.SPX> gained 1.58 points, or 0.08 percent, to 2,083.48 and the Nasdaq Composite <.IXIC> added 3.63 points, or 0.07 percent, to 4,954.45.

Declining issues outnumbered advancing ones on the NYSE by 1,601 to 1,385, for a 1.16-to-1 ratio on the downside; on the Nasdaq, 1,514 issues fell and 1,121 advanced for a 1.35-to-1 ratio favouring decliners.

The benchmark S&P 500 index was posting 12 new 52-week highs and 1 new lows; the Nasdaq Composite was recording 69 new highs and 25 new lows.

(Editing by Meredith Mazzilli)