Stocks Rise as Yields, Oil Fall
Stocks finished higher Wednesday, after a General Motors (GM) union deal and declines in oil prices helped investors look past a Microsoft (MSFT) product delay. A slight drop in Treasury yields after their jump Tuesday also helped set a positive backdrop, says Standard & Poor's MarketScope.
The Dow Jones industrial average rose 81.96 points, or 0.73%, to 11,317.43, its highest close since May, 2001, led by Caterpillar (CAT) and J.P. Morgan Chase (JPM). The broader Standard & Poor's 500 index added 7.81 points, or 0.6%, to 1,305.04. The tech-heavy Nasdaq composite index gained 9.12 points, or 0.4%, to 2,303.35.
With no major economic reports on tap, investors took heart in news from General Motors (GM). The automaker finished modestly higher after rising as much as 3% on a deal with former unit Delphi and the United Auto Workers union. The agreement, pending court approval, would offer early retirement incentives to 100,000 GM workers and 13,000 Delphi employees.
On the downside, Microsoft (MSFT) was lower after the software giant said Windows Vista, a new operating system five years in the making, won't be available to consumers until January.
Computer makers Hewlett-Packard (HPQ) and Gateway (GTW) fell on speculation the lag may hurt holiday sales. Dell (DELL) rose after introducing a high-end computer system for videogame players.
Rival Apple (AAPL), which doesn't use the Microsoft operating system, was also lower. French lawmakers approved a bill that would require Apple to share proprietary information behind its iTunes music software.
In earnings news, investment bank Morgan Stanley (MS) was higher after posting a 17% increase in first-quarter profit. The increase follows upbeat reports from peers Goldman Sachs (GS) and Lehman Brothers (LEH). Morgan Stanley also indicated plans to buy oil products marketer TransMontaigne (TMG).
Shipper FedEx (FDX) was slightly lower after delivering 35% higher third-quarter profits. The company also boosted its earnings outlook for the rest of fiscal 2006.
Outside earnings, pharmaceutical companies Bristol-Myers Squibb (BMY) and Sanofi-Aventis (SNY) surged after settling a patent infringement lawsuit with Apotex related to blood-thinning drug Plavix.
Retail behemoth Wal-Mart (WMT) was modestly lower after unveiling a Plano, Texas, test store that aims to reach upscale shoppers.
On the economic calendar, reports on weekly jobless claims and February existing home sales are due Thursday. February durable goods orders and new home sales are on the docket Friday.
In the energy markets Wednesday, May West Texas Intermediate crude oil futures closed down 57 cents at $61.77 a barrel, despite a weekly inventory report showing supplies unexpectedly fell 1.3 million barrels. Weak gasoline prices pulled crude futures lower, says Action Economics.
European markets finished higher. In London, the Financial Times-Stock Exchange 100 index rose 16.2 points, or 0.27%, to 6,007.5. Germany's DAX index added 20.45 points, or 0.35%, to 5,932.31. In Paris, the CAC 40 index climbed 46.22 points, or 0.9%, to 5,194.78.
Asian markets finished lower. Japan's Nikkei 225 index fell 129.32 points, or 0.78%, to 16,495.48. In Hong Kong, the Hang Seng index sank 279.94 points, or 1.76%, to 15,642.81. Korea's Kospi index skidded 26.82 points, or 2.01%, to 1,309.83.
Treasury yields tiptoed lower. Prices for 10-year Treasury notes closed modestly higher at 98-13/32 with a yield of 4.7%, while 30-year bonds rose to 96-14/32 for a yield of 4.72%. Trading was subdued amid the lack of major economic reports, says S&P MarketScope.