Stocks Edge Up on Inflation, Earnings News

Investors weighed a report on inflation and solid quarterly earnings from IBM, Texas Instruments, and Yahoo. Oil prices topped $72 a barrel

Stocks moved slightly higher Wednesday afternoon as investors weighed a report on inflation and solid quarterly earnings from tech bellwethers IBM (IBM), Texas Instruments (TXN), and Yahoo! (YHOO). The 10-year Treasury yield rose back above 5%, while crude oil headed north of $72 a barrel amid drawdowns in weekly energy inventories, says Standard & Poor's Equity Research.

The Dow Jones industrial average rose 10 points, or 0.09%, to 11,278.77. The broader Standard & Poor's 500 index was up 1.75 points, or 0.17%, to 1,309.93. The tech-heavy Nasdaq composite gained 14.74 points, or 0.63%, to 2,370.88.

In the energy markets, May West Texas Intermediate crude oil rose 82 cents to $72.17 a barrel, another record close. In addition to the usual geopolitical concerns, a surprise draw in weekly crude stocks combined with a much larger than expected decline in gasoline inventories, to lift prices across the complex, says Action Economics.

In economic news, the consumer price index rose 0.4% and the core was up 0.3% in March, following gains of 0.1% for both in February. Prices of energy, apparel, and transportation rose, after declining in the prior month. On a year-over-year growth basis, the overall index slowed to 3.4% from 3.6% in February. The core index was steady at 2.1%, however. The data are close to expectations, though the core CPI is fractionally higher than the 0.2% forecast, says Action Economics.

On the earnings front, Texas Instruments (TXN) reported first-quarter earnings per share of 33 cents, vs. 21 cents, first-quarter EPS from continuing operations on a 23% revenue rise. The chip maker sees 38-43 cents second-quarter EPS from continuing operations.

Yahoo! (YHOO) posted first-quarter EPS of 11 cents, vs. 14 cents, as higher costs and expenses offset a 34% revenue rise.

IBM (IBM) first-quarter earnings per share of $1.08, vs. 84 cents, despite a 9.8% revenue drop. The computer company noted that first quarter of 2005 included revenue from its divested PC business. Excluding PC revenue, first-quarter 2006 revenues were flat; adjusted for forex, revenues rose 4%.

One stock falling was Motorola (MOT), which posted disappointing first-quarter earnings per share of 27 cents, vs. 28 cents a year ago, as stock compensation expense, reorganization charges, and smaller gain on investments offset a 23% sales rise. The company sees $10.3 billion to $10.5 billion in second-quarter sales, and 30-32 cents EPS.

United Technologies (UTX) shares rose after the maker of elevators and other building systems posted first-quarter EPS of 76 cents, vs. 64 cents a year ago, on 13% higher consolidated revenue. It raised 2006 EPS guidance to $3.50-$3.60 from a prior $3.40-$3.55 outlook.

Coca-Cola (KO) posted first-quarter EPS of 47 cents, vs. 42 cents (including charges), despite flat sales. The beverage giant plans to buy back $2 billion to $2.5 billion of stock for the year.

Other companies reporting earnings on Wednesday include Apple Computer (AAPL), eBay (EBAY), Intel (INTC), J.P. Morgan (JPM), Pfizer (PFE) and Qualcomm (QCOM).

Thursday's earnings calendar includes Altria Group (MO), Bank of America (BAC), BellSouth (BLS), Capital One Financial (COF), Eli Lilly (ELY), General Motors (GM), Google (GOOG), Merck (MRK), Newmont Mining (NEM), Nucor (NU), and UPS (UPS).

Treasury Markets

Treasury yields rebounded after the 0.3% core CPI print came in above expectations and injected a little 2-way risk back into the bond market after the tame PPI report and dovish FOMC minutes on Tuesday, says Action Economics. The benchmark 10-year yield was up 5 basis points to 5.03%.

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