US Stocks Edge Up
US stocks managed mild gains yesterday as investors reacted to broadly upbeat earnings and awaited testimony from Alan Greenspan for clues about the pace of interest rate increases.
His comments will be more closely scrutinised than usual, coming as markets are beginning to worry about a slowdown in the US economic recovery.
The Dow Jones Industrial Average edged up 0.1 per cent to 10,105.85. The S&P; 500 added 0.1 per cent to 1,102.15, while the Nasdaq added 0.5 per cent to 1,892.64.
The markets took news of a surging oil price in its stride. Crude oil rose above $42 a barrel on worries that demand is fast outstripping supply.
On the economic front, new-home construction slowed in June, dropping 8.5 per cent from May. It was the lowest number of starts since May 2003. The news knocked housing stocks, sending Pulte Homes down 2.4 per cent to $50.78 and Toll Brothers down 1.3 per cent to $39.16.
Liz Ann Sonders, chief investment strategist at Charles Schwab, said it was too soon to say whether the housing figures suggested an economic slowdown or were merely "a soft spot". But the recent string of weaker data alleviated concerns that the Fed would be forced to raise rates sharply, she said.
Markets remember 1994, when a quick, sharp tightening cycle hit stocks hard.
Earnings season continued, and Ford Motor slipped 3.5 per cent to $14.45 after the company's raised full-year earnings guidance was still not as bullish as Wall Street's view. Markets shrugged off profits that more than doubled. Rival General Motors slipped 1.3 per cent to $43.21 ahead of its own earnings, due out today on Wednesday.
Altria Group, parent of Philips Tobacco and stakeholder in Kraft Foods, edged up 0.4 per cent to $49.01 after unveiling rising second-quarter profit on climbing revenues, particularly in its international business.
Taser International, maker of stun guns, sank 12.1 per cent to $31.94 in spite of reporting rising profits on the back of record-setting order flows. The company's weapons have proved popular with police, but a New York Times article at the weekend questioning their safety prompted a 9.7 per cent fall in the shares on Monday.
Corning, the world's biggest maker of fibre-optic cable, rose 9.9 per cent to $12.39 after the company said it swung to a profit amid robust demand for its liquid crystal display panels.
Flextronics International dropped 6.3 per cent to $13.18 after the world's biggest contract electronics manufacturer warned that its September quarter earnings might miss market forecasts.
Elsewhere in technology things looked better. EMC, the computer storage maker, rose 3.8 per cent to $10.75 as profits more than doubled. The company also cheered investors by saying it saw improvement in tech spending.
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