US stocks: Airbus' loss is Boeing's gain

NEW YORK - US stocks rose on Wednesday and the Nasdaq snapped an eight-day losing streak as investors bought up recently beaten-down shares, and a wave of good news boosted shares of airplane manufacturer Boeing Co.

Brokerage upgrades boosted semiconductor stocks and shares of energy companies like Exxon Mobil Corp. and ConocoPhillips climbed, as US crude oil prices rose, following a bigger-than-expected drop in crude inventories.

But bank stocks fell amid worries that inflation will drive short-term interest rates higher and crimp bank profits.

"We're due for a bounce back," said Tim Heekin, director of trading at San Francisco investment bank, Thomas Weisel Partners. "The leadership in the market is primarily coming energy and commodity stocks as well as technology." The Dow industrials made its biggest gain in almost 6 weeks, pushing it back into positive territory for the year.

The Dow Jones industrial average was up 110.78 points, or 1.03 per cent, at 10,816.92. The Standard & Poor's 500 Index was up 6.35 points, or 0.52 per cent, at 1,230.04. The Nasdaq Composite Index was up 13.53 points, or 0.65 per cent, at 2,086.00.

Also helping sentiment, Goldman Sachs' Chief Investment Strategist, Abby Joseph Cohen, said she thought the S&P 500 index was underpriced at current levels.

Shares in Boeing jumped 6.5 per cent to US$82.01, after Goldman Sachs upgraded the plane manufacturer, while rival EADS plunged in Europe after it said its Airbus A380 superjumbo would be delayed.

"The one positive today is Boeing," said Larry Peruzzi, senior equity trader at The Boston Company Asset Management.

A Goldman Sachs analyst also raised his investment rating on several semiconductor stocks. Intel Corp. shares rose 3.6 per cent to US$17.73, while shares of rival Advanced Micro Devices added 2.7 per cent to US$25.11.

But three of the largest US banks were the biggest drags on the S&P as investors grew concerned about higher interest rates.

Federal Reserve Bank of Dallas President Richard Fisher said some measures of inflation show it running at levels that cause discomfort and are unacceptable.

Shares of Bank of America Corp fell 0.9 per cent to US$46.64, Citigroup Inc. sank 0.9 per cent to US$47.80 and JPMorgan Chase & Co. was down 1.4 per cent to US$39.97.

Fisher's comments came after the government said consumer prices, excluding food and energy, rose 0.3 per cent in May for the third month in a row. Fed funds futures traders have fully priced in a quarter-percentage-point interest rate hike at the Fed's next policy meeting at the end of June.

Exxon shares rose 1.7 per cent to US$57.80 and ConocoPhillips shares added 2.7 per cent to US$59.46. Crude for July delivery settled 58 cents higher at US$69.14 a barrel.

On both the Nasdaq and the New York Stock Exchange, advancing shares just barely outnumbered declining shares.

Trading was active on the NYSE where about 1.9 billion shares were traded, topping the 1.61 billion daily average for last year. On Nasdaq, about 2.1 billion shares were changing hands, above the 1.8 billion daily average last year.

- REUTERS