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NEW YORK - US stocks rose for a third day today, pushing the Dow average to yet another record, helped by a big aircraft order for Boeing Co. and a share-buyback plan from Caterpillar Inc.
Federal Reserve Chairman Ben Bernanke, in his second day of congressional testimony, told lawmakers that economic growth could be stronger than perceived, but the day's data mostly painted a weaker economic picture. The market rallied on Wednesday after Bernanke said inflation is poised to ease while the economy grows moderately.
"There's a lot of liquidity in the market, a nirvana environment in terms of the Fed and a lot of merger activity occurring," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.
The Dow Jones industrial average rose 23.15 points, or 0.18 per cent, to end at 12,765.01, its 29th record close since the beginning of October 2006.
The Standard & Poor's 500 Index edged up 1.51 points, or 0.10 per cent, to finish at 1,456.81 -- a six-year high. The Nasdaq Composite Index gained 8.72 points, or 0.35 per cent, to close at 2,497.10.
The Dow also rose to an intraday record high of 12,779.03.
The biggest contributor to the Dow's advance was US aircraft maker Boeing Co., whose stock gained 2 per cent, or US$1.77, to US$91.71 after it confirmed an order for 27 of its 767-300 freighters from package delivery company United Parcel Service Inc.
Ranked No. 2 among the Dow's major advancers was Caterpillar, a maker of heavy construction and mining equipment. The company unveiled plans for a US$7.5 billion share buyback over the next five years, citing its confidence in long-term growth prospects and cash-flow generation. Caterpillar's shares rose 2.2 per cent, or US$1.46, to US$67.62 on the New York Stock Exchange.
Opening a new window
After the closing bell, shares of Microsoft Corp. fell 1.1 per cent to US$29.15 after Chief Executive Steve Ballmer said analysts' forecasts for revenue from Windows Vista in fiscal 2008 were "overly aggressive." Microsoft's stock closed at US$29.46 on the Nasdaq.
During the regular session, the S&P 500 got a lift from insurer UnitedHealth Group, whose shares shot up 3.8 per cent, or US$1.97, to US$53.61, after a regulatory filing showed Warren Buffett's Berkshire Hathaway Inc. bought 1 million shares of the company.
Shares of Qualcomm Inc. gave the biggest boost to the Nasdaq after Oppenheimer & Co. said it is raising its rating on the stock of the wireless chip supplier, citing the potential for higher-than-anticipated earnings this year and next year. Qualcomm shares rose 4.2 per cent, or US$1.65, to US$41.31.
Also on the Nasdaq, shares of Network Appliance Inc., a maker of network storage equipment, rose 4.9 per cent, or US$1.89, to US$40.30 after it gave a revenue forecast that was above average Wall Street expectations.
Reality vs romance
On the second day of his semiannual report to Congress, the Fed chairman said the economy might be stronger than it appears, adding that the Fed would raise interest rates if inflation moved higher.
Those remarks brought Wall Street back to reality after the stock market's sharp rally on Valentine's Day, when one economist described Bernanke's calm assessment of a modestly growing economy with inflation under control as "a love note" to the US financial markets.
On Wednesday, traders said Bernanke's comments increased hopes that the Fed may cut rates later in the year, which could help enhance corporate profits.
On Thursday, government data showed US industrial output fell in January, while a survey of Mid-Atlantic manufacturers suggested things were not getting any better in February, showing activity in the region was essentially at a standstill.
The Federal Reserve Bank of Philadelphia's survey of US mid-Atlantic manufacturing showed business activity barely rose in February -- a reading that was well below economists' expectations.
Trading was light to moderate on the NYSE, with about 1.38 billion shares changing hands, well below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 2.03 billion shares traded, almost matching last year's daily average of 2.02 billion.
Advancing stocks outnumbered declining ones by a ratio of about 3 to 1 on the NYSE, while advancers just slightly outpaced decliners on the Nasdaq.
- REUTERS