US stocks: Shares end up on data

NEW YORK - US stocks closed higher on Friday, with the Standard & Poor's 500 index and Nasdaq stretching their rally to seven consecutive days, as investors took heart from reports the economy remains on solid footing.

The S&P 500 closed at a new four-year high, while the Nasdaq hit a new high for 2005.

Shares of McDonald's Corp. and Cintas Corp. jumped after the companies reported better-than-expected earnings. Their momentum helped offset a drop in the shares of General Electric Co., which issued a third-quarter earnings forecast that lagged Wall Street's expectations.

The Dow Jones industrial average was up 11.94 points, or 0.11 per cent, to end at 10,640.83. The Standard & Poor's 500 Index was up 1.42 points, or 0.12 per cent, to finish at 1,227.92. The technology-laced Nasdaq Composite Index was up 3.96 points, or 0.18 per cent, to close at 2,156.78.

All three indexes ended the week higher for the third week in a row. The Dow was up 191.69 points, or 1.8 per cent for the week. The S&P 500 gained 16.06 points, or 1.3 per cent, and the Nasdaq was ahead 43.9 points, or 2 per cent for the week.

The S&P 500 is in its longest rally since November, while the Nasdaq is scoring its longest winning streak since May.

Stocks rebounded late in the afternoon after being down for much of the day in a move one trader described as a short-covering rally.

"People shorted the market this morning a little bit," said Mike O'Hare, head of listed trading at Lehman Brothers, in New York. "They didn't get their downdraft and they're covering. This happens a lot in the summer time. You get these artificial rallies because of short covering. People are trying to game the market."

INFLATION STEADY

The government said a measure of wholesale inflation held steady last month and reported industrial production rose at a quicker-than-expected rate in June.

"The economic data that we got today continues a string of very positive reports indicating sustained economic growth and low inflation," said Michael Sheldon, chief market strategist at Spencer Clarke LLC, of New York. "These days it's just hard to find any inflation in the economy, which is surprising with oil prices at $60." Light, sweet crude futures for August delivery settled at $58.09, up 29 cents on NYMEX, amid fears that Hurricane Emily would affect oil platforms in the Gulf of Mexico.

EARNINGS MIXED

After a week when earnings reports from top US companies had largely exceeded expectations, investors were faced with mixed earnings reports on Friday.

"Earnings growth probably still is going to be slowing for the next two quarters," said Subodh Kumar, chief investment officer at CIBC World Markets, in Toronto.

McDonald's shares rose 4.7 per cent, or $1.39, to $30.99 on the New York Stock Exchange after the company posted preliminary second-quarter earnings that topped Wall Street forecasts. McDonald's provided the biggest lift to the Dow and S&P 500.

Cintas was also up, rising 10.6 per cent, or $4.20, to $44 on Nasdaq a day after its quarterly profits beat expectations.

But GE, while reporting second-quarter earnings that met analysts' estimates, offered a third-quarter forecast that was lower than Wall Street had expected. Its shares slipped 0.3 per cent, or 10 cents, to $35.53 on the NYSE.

Trucking company J.B. Hunt Transport Services Inc. reported earnings that were 20 per cent higher than a year ago, but less than what Wall Street expected. Its shares dropped 4.7 per cent, or 98 cents, to $20.01 on Nasdaq.

July stock options and some options on stock indexes stopped trading at Friday's close and expire Saturday.

Trading was moderate, with 1.33 billion shares changing hands on the New York Stock Exchange, below the 1.46 billion daily average for last year. About 1.53 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.

Advancers slightly outnumbered decliners on the New York Stock Exchange and on Nasdaq.

- REUTERS