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US stocks gain on H-P's upbeat outlook, but gloom persists
NEW YORK
Petroleumworld.com, November 19, 2008US stocks made gains Tuesday as investors took comfort in computer maker Hewlett-Packard's upbeat outlook amid a series of depressing company news and deteriorating economic conditions.
The Dow Jones Industrial Average rose 125.60 points (1.52 percent) to 8,399.18 around 1633 GMT and the Nasdaq climbed 2.01 points (0.14 percent) to 1,484.06.
The broad Standard & Poor's 500 index advanced 8.03 points (0.94 percent) to 858.78.
"Concerns about the economy and the stock market's continued poor showing weighed heavily on sentiment," said Patrick O'Hare, analyst at Briefing.com.
He said the market would be focused on testimony by Treasury Secretary Henry Paulson, Federal Reserve chairman Ben Bernanke and Federal Deposit Insurance Corporation chairwoman Sheila Bair before the House of Representatives Financial Services Committee.
The three officials discussed the 700 billion dollar Troubled Asset Relief Program authorized last month for the financial sector, amid growing calls to shore up the ailing auto industry.
"The purpose of the financial rescue legislation was to stabilize our financial system and to strengthen it. It is not a panacea for all our economic difficulties, Paulson told lawmakers, reiterating opposition to using the funds for the auto industry.
The heads of the Big Three automakers -- General Motors, Ford and Chrysler -- were to plead their case later Tuesday before a Senate panel.
A key indicator of price pressures in the manufacturing pipeline -- the Labor Department's producer price index -- plunged a record 2.8 percent in October in a further sign of economic woes.
It was the third monthly decline in a row and the steepest since the department began reporting the data in 1947.
"Inflation is yesterday's problem. Commodity prices have plunged and are driving producer prices down," said Nigel Gault, chief US economist at IHS Global Insight.
"It is remarkable that in just a few months fears have switched from inflation to deflation, a testament to how suddenly the global economy's expansion has turned into recession," Gault said.
Among stocks in focus, Hewlett-Packard leapt 9.75 percent to 32.20 dollars after the computer maker reported a strong third quarter and issued upside earnings guidance.
"The outlook comes as a refreshing dose of good news as the trend of disappointing quarterly results and downwardly revised outlooks from various businesses have added to investors' gloom," analysts at Briefing.com wrote in a client note.
Yahoo soared 13.55 percent to 12.07 after the company said co-founder Jerry Yang would step down as chief executive. Analysts saw the move as paving the way for Microsoft to make another takeover offer.
Ford edged ahead 0.58 percent to 1.73 after announcing it would cut its stake in Japanese partner Mazda Motor Corp by 20 percent to raise 540 million dollars.
GM plunged 8.89 percent to 2.90. On Monday it said it sold its stake in Suzuki.
The action came after a heavy sell-off Monday, with the indices losing more than two percent, after a weekend financial crisis summit of the Group of 20 industrialized and emerging economies failed to calm investor fears.Bonds gained. The yield on the 10-year US Treasury bond fell to 3.620 percent from 3.684 percent Monday and that on the 30-year bond dropped to 4.181 percent from 4.206 percent. Bond yields and prices move in opposite directions.
Story from AFP
AFP 18 1657 GMT 11 08Copyright© 2008 respective author or news agency. All rights reserved.
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