U.S. Stocks Turn Higher, Led By Techs, Materials
NEW YORK (MarketWatch) -- U.S. stocks turned higher on Wednesday afternoon as investors bought up battered shares in the energy and materials sectors, with interest in mining shares sparked by Xstrata's $10 billion hostile bid for Lonmin, the world's third largest platinum miner.
Technology shares were also well bid after networking equipment-maker giant Cisco Systems' results topped estimates.
The Dow Jones Industrial Average gained 36 points, or 0.3%, to 11,651, with 14 of its 30 components rising, led by a 3.5% gain in shares of Caterpillar Inc. and a 2.5% gain in shares of Alcoa Inc. .
Among declining blue-chips were shares of American International Group. . Societe Generale initiated coverage of the firm, slated to report quarterly results after the close, with a sell rating.
The S&P 500 index rose 4 points to 1,289, while the technology-heavy Nasdaq Composite rose 30 points to 2,380.
Leading tech shares, shares of Cisco Systems rose 6.2% after quarterly results at the networking-equipment bellwether topped analysts expectations. Jefferies & Co. analyst Bill Choi said the results show signs of stabilization in the U.S. enterprise market and said the company's forecast for the first half of fiscal 2009 was conservative.
Stocks surged on Tuesday as oil prices continued to slide and as the Federal Reserve kept interest rates steady while giving no hints it might change course on monetary policy any time soon.
In energy trading, oil futures continued to fall, with crude for September delivery ending down 59 cents at $118.58, after news of an unexpected increase in last week's U.S. inventories.
Wednesday's focus shifted back to quarterly results, with ailing financials again in the spotlight.
Freddie Mac slumped 17% as it reported a wider-than-forecast $821 million loss, cut its dividend and said it's considering issuing more stock.
Ambac Financial , the bond insurer, reported a second-quarter profit due to credit derivative gains, but its operating loss was worse than forecast. Still, Ambac's shares rallied 19%.
Societe Generale started coverage of AIG and peer Travelers at sell, noting that question marks continue to hang over risk controls and the efficiency of capital allocated per activity. Analysts also took a negative view of the U.S. commercial lines market.
Media giant Time Warner reported a 26% profit drop for the second quarter on declining contributions from its AOL and publishing arms.
News Corp.
reported a 27% quarterly profit rise on the back of its film and cable businesses, though its chief financial officer said revenue growth would slow. News Corp. owns MarketWatch, the publisher of this report.
By Nick Godt