U.S. Stocks Rise; Dow Tops 14,000 On Upbeat Earnings
NEW YORK (MarketWatch) - U.S. stocks climbed Tuesday, propelling the Dow Jones Industrial Average past the 14,000 level for the first time, helped by upbeat earnings and an upgrade of American Express Co., one of its 30 components.
"There are a couple of things in play, including the psychological number of 14,000 and the drive for that," said Jay Susskind, director of trading at Ryan, Beck & Co.
"We're in the first couple of innings of earnings season," Susskind said, noting some better-than-expected earnings, including from Merrill Lynch & Co.
The Dow Jones Industrial Average climbed 51 points to 14,001, after earlier reaching a high of 1,4011.
Among the Dow's 30 stocks, 19 were ahead, led by the likes of DuPont , Microsoft Corp. and Intel Corp. .
Leading the gains among blue chips, American Express jumped 4.6% after being upgraded to buy from neutral at Goldman Sachs. "We believe that its network business is currently undervalued," the brokerage said. Goldman Sachs also upped the price target to $77 from $66.
Intel rose 1.8% ahead of its earnings report after the close.
The semiconductor sector also helped lift the market, after chip-equipment maker Novellus Systems Inc. offered a stronger-than-expected outlook for its orders. The stock surged 10%.
The S&P 500 gained 1.9 points to 1,551 and the Nasdaq Composite climbed 15.8 points to 2,713.
Trading volumes showed 882 million shares exchanging hands on the New York Stock Exchange and 1,328 million on the Nasdaq.
Advancing issues ran even with decliners on the NYSE and by 15 to 13 on the Nasdaq.
By sector, multimedia networking , semiconductor and hardware stocks led the advance, while pharmaceuticals , consumer , biotech and insurance were the few on the decline.
Stocks on the march
Merrill Lynch lost earlier gains, losing 0.6%. The New York securities firm delivered better-than-expected results at a time when subprime-mortgage woes have roiled the debt and credit markets. During a conference call with analysts, however, the firm said the subprime issue remains a concern.
Coca-Cola Co. fell 1.3%, even after its second-quarter earnings exceeded expectations. The stock had risen strongly since last week and hit a new high on Monday.
Johnson & Johnson fell 1.8% after earnings topped estimates but investors grew concerns over the future sales of its drug-coated coronary stents and the anemia therapy Procrit/Eprex.
Yahoo Inc. is scheduled to report earnings after the close of trading.
Subprime lender NovaStar Financial Inc. outlined investment agreements with funds managed by MassMutual and Jefferies Group that will raise $150 million in equity.
Lyondell Chemical Co. will be purchased by Bassell for $19 billion. Separately, BASF AG said it received an offer for some divisions that generate sales of over $4 billion.
"So far the earnings season, although brand new, has come in pretty good," said Robert Pavlik, chief investment officer at Oaktree Asset Management.
Even rising energy costs and the subprime mortgage meltdown have a potential positive impact on the equities market, Pavlik said. "Without that draw down on the economy from housing and higher oil prices the Fed would have to step in and raise interest rates."
On Monday, the Dow Jones industrials closed up 43 points at a record, while the S&P 500 dropped nearly 3 points and the Nasdaq Composite lost 9.6 points. Further jitters about the subprime-mortgage sector drove safe-haven buying of Treasury bonds.
On Tuesday, investors focused on earnings news and the latest producer-prices report.
Stocks have trended higher in recent months, fueled by factors including M&A activity and consumer spending. And, even modestly optimistic earnings reports have helped offset concerns about higher fuel prices and trouble in the housing market anloan industry.
In pre-opening action, the futures contracts strengthened after the Labor Department reported that producer prices fell 0.2% in June, when food and energy prices declined after four months of hefty increases. The headline figure went against economists' expectations for a 0.2% increase.
Other markets
Treasurys fell, sending yields higher. Fixed-income investors reacted to news that core producer prices, excluding food and energy, rose slightly more than expected in June. The benchmark 10-year Treasury bond was down 2/32 at 95 24/32, while its yield , which moves inversely rose to 5.060%.
The dollar edged higher against the yen after the PPI report. In other trading, the British pound rallied to a new 26-year peak against the dollar after hotter-than-expected inflation data boosted expectations that the Bank of England will continuing hiking interest rates.
The euro was flat at $1.3774, while the dollar was up 0.2% at 122.12 yen. The pound was up 0.4% at $2.0453, after touching an intraday peak of $2.0472.
Gold futures extended their losses for a third day, with gold for August delivery finishing 40 cents lower to $665.90 an ounce on the New York Mercantile Exchange.
Crude futures retreated from a high of more than $75 a barrel, led by a decline in reformulated gasoline futures to their lowest level in more than a month.
By Kate Gibson