US stocks: Markets rise on earnings

NEW YORK - US stocks closed higher on Wednesday, lifted by brokerage upgrades of blue chips like IBM, better-than-expected earnings reports and an unexpected narrowing of the US trade deficit.

The Nasdaq and the S&P 500 posted their fifth straight day of gains.

Brokerage upgrades led to a strong day for shares of International Business Machines Corp. and Hewlett-Packard Co., which helped drive the Dow higher. Shares of Apple Computer Inc. rose after the bell, following quarterly earnings that topped expectations.

As the corporate earnings season gets rolling, companies reporting better-than-expected results included Abbott Laboratories Inc., which develops drugs and medical devices, and motorcycle maker Harley-Davidson Inc. In addition, newspaper publisher Gannett Co. Inc. and regional banking company BB&T Corp. met Wall Street expectations.

"Even though it's somewhat scant so far, it does seem that the earnings season may turn out to be somewhat better than expected," said Peter Cardillo, chief market analyst and chief strategist at SW Bach & Co., of New York.

The Dow Jones industrial average rose 43.50 points, or 0.41 per cent, to end at 10,557.39. The Standard & Poor's 500 Index was up 1.08 points, or 0.09 per cent, at 1,223.29. The technology-laced Nasdaq Composite Index was up just 0.96 of a point, or 0.04 per cent, to close at 2,144.11.

After the closing bell, Apple shares rose to US$38.53 on the Inet electronic brokerage network from a US$38.35 Nasdaq close.

"It looks very solid," said Jim Fisher, portfolio manager at Univest Wealth Management, which owns Apple shares. "The thing that stands out for me is the iPod shipments, which were 1 million more than what the Street was anticipating. I know there were some concerns about inventory buildup several months ago, so that is very good news."

During the regular session, IBM shares rose 1.8 per cent, or US$1.41, to US$81.45 and the stock of Hewlett-Packard, a computer and printer maker, gained 1.3 per cent, or 31 cents, to US$24.42, both in New York Stock Exchange trading.

Shares of Harley-Davidson were up 1.4 per cent, or 68 cents, at US$50.38 and BB&T was up 1.8 per cent, or 74 cents, at US$41.95, while Gannett eased 0.6 per cent, or 46 cents, to US$72.95, all in NYSE trading.

Abbott Labs shares slid more than 4 per cent, or US$2.07, to US$47.65, trading ex-dividend.

Shares of hospital chain HCA Inc. sank 8.9 per cent, or US$4.86, to US$50.05 on the NYSE after the company said second-quarter operating earnings will probably fall below Wall Street forecasts.

Good news

In economic data, the Commerce Department reported that the US trade deficit unexpectedly narrowed in May to US$55.3 billion.

"The underlying economy is chugging along nicely," said Arnie Owen, managing director of Merriam Curhan Ford & Co. out of San Francisco.

Oil prices swung between positive and negative territory throughout the day, before settling at US$60.01 a barrel for light, sweet crude futures for August delivery, off 61 cents on the NYMEX.

US crude oil inventories dropped 3.9 million barrels last week as stormy weather delayed offloading of imports passing through the Gulf of Mexico, a government report showed.

Oil's price fluctuations kept the Nasdaq and the S&P 500 alternating between declines and gains through the day.

"Crude's kind of flopping around, therefore, you've kind of got the market flopping around," said Dan McMahon, head of listed trading at CIBC World Markets Inc., of New York.

Trading was moderate, with 1.36 billion shares changing hands on the New York Stock Exchange, below the 1.46 billion daily average for last year. About 1.55 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.

The number of shares declining in value exceeded the number advancing by a ratio of about 6 to 5 on the NYSE and by more than 8 to 7 on Nasdaq.

- REUTERS