US stocks: Market ends higher after Boeing results, Fed move

NEW YORK - US stocks rose on Wednesday after good earnings from Boeing Co. and the Federal Reserve raised rates by a quarter-percentage point, keeping its pledge to tighten credit at a measured pace.

The gains pushed blue chips to their longest winning streak this year, as the blue-chip Dow average marked its first three-day run of consecutive gains in 2005.

Strong earnings from Google Inc. also helped lift stocks. Web search company Google jumped 7 per cent, or US$14.06, to US$205.96 a day after the company reported quarterly earnings that surpassed expectations. Rival Yahoo Inc. climbed 2.3 per cent, or 79 cents, to US$35.54.

After the bell, shares of online retailer Amazon.com Inc. fell nearly 14 per cent to US$36.15 after it missed Wall Street estimates.

The Dow Jones industrial average was up 44.85 points, or 0.43 per cent, at 10,596.79. The Standard & Poor's 500 Index was up 3.78 points, or 0.32 per cent, at 1,193.19. The Nasdaq Composite Index was up 6.36 points, or 0.31 per cent, at 2,075.06.

Trading was active, with 1.59 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.96 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Advancers outnumbered decliners on the New York Stock Exchange by about 5 to 3 and by about 9 to 7 on Nasdaq.

The Fed's 25-basis-point interest-rate hike was widely expected so investors were more focused on the accompanying statement.

"I think this was a decision that was very well anticipated. The Fed has been very clear throughout this tightening cycle that they will tighten at a measured pace," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

"The Fed telegraphed this series of rate increases extremely well and there have been absolutely no surprises -- so the market pretty much yawns at it. It knows what the Fed's going to do and they're doing it. The only question is at what level does the Fed say, 'We've had enough for now.' We're getting closer, but I don't believe we're there yet."

While meant to keep inflation in check, higher interest rates can weigh on stocks as they raise the cost of borrowing for companies and consumers.

However, US stocks have broadly shaken off the latest interest-rate tightening cycles, with stocks closing higher for four out of the five sessions when rates were raised, Reuters data show.

Meanwhile, a drop in crude oil prices also helped. Crude declined for the second straight session, with March crude settling down 43 cents, or nearly 1 per cent, at US$46.69 a barrel."

"We did see crude oil ... close down on the day and that's generally positive for the stock market," Ghriskey said.

Dow component Boeing Co. climbed 2.3 per cent, or US$1.19, to US$52.23. The commercial and military jet maker posted an 84 per cent drop in quarterly profit on charges related to two aircraft programmes, but it beat forecasts and sees stronger growth through 2006.

Software maker Adobe Systems Inc. rose 7.6 per cent, or US$4.39, to US$62.29 after it raised its current first-quarter earnings and revenue outlook.

Countrywide Financial Corp. fell 5.6 per cent, or US$2.12, to US$35.91 after the largest US mortgage lender said fourth-quarter profit declined 39 per cent, as earnings of its largest business, mortgage banking, fell by two-thirds.

But shares of video game publisher THQ Inc. jumped 18 per cent, or US$4.10, to US$26.96, a day after it said quarterly profit doubled, beating Wall Street forecasts.

In its earnings report after the market closed, Amazon said that stripping out the benefit from realising a US$244 million deferred tax asset, its fourth-quarter net income excluding items would have been 35 cents per share.

On that basis, Wall Street analysts were expecting the company to post a per-share profit of 40 cents per share.

During regular trading, Amazon's stock fell 1.4 per cent, or 60 cents, to close at US$41.88.

The volume of purchases of Amazon puts before Wednesday's closing bell was active, indicating that some options players were making bearish bets before the online retailer released its quarterly earnings.

- REUTERS