(by Dr. Goldfinger)
US stocks ended higher on Tuesday as investors reacted to broadly upbeat earnings and positive testimony from Alan Greenspan that soothed worries about recent signs of weakness in the economy.
The Dow Jones industrial rose 55.01 points, or 0.54%, to 10,149.07, the S&P 500 gained 7.77 points, or 0.71%, to 1,108.67, and the Nasdaq Composite rose 33.24 points, or 1.76%, to 1,917.07.
Stocks climbed yesterday after U.S. Federal Reserve Chairman Alan Greenspan said economic growth remains solid and inflation poses no major threat. In his semi-annual report on monetary policy to the Senate Banking Committee on Tuesday, Greenspan dismissed concerns about recent softness in economic data and said that the period of low interest rates must end. He said that the risks of tightening were outweighed by leaving low rates in place as the economy improves, also Mr. Greenspan said the economy was prepared for gradual rate hikes and also could handle "less gradual" rate increases if necessary.
Microsoft’s shares rose to $29.59 in extended hours trading from $28.32 at its Nasdaq close after it announced its dividend and buyback plans.
Ford Motor slipped 2.5% to $14.60 after the company’s increased full-year earnings guidance was still not as bullish as Wall Street’s view. Markets shrugged off profits that more than doubled. Rival General Motors slid 0.4% to $43.60 ahead of its own earnings, due out on Wednesday.
Altria Group, parent of Philips Tobacco and stakeholder in Kraft Foods, edged down 0.1 per cent to $48.77 after unveiling rising second-quarter profits on climbing revenues, particularly in its international business.
Motorola, Sun Microsystems and Texas Instruments were scheduled to report earnings after the close and were buoyed by the tech rally. Motorola shares rose 4.2% to $16.09, while Sun Microsystems gained 4.3% to $4.11 and Texas Instruments added 4% to $21.76.
Charles Schwab rose 6.6% to $8.85 on news that David Pottruck, chief executive, had resigned at the behest of the board of directors. The board appointed the discount brokerage’s founder and current chairman Charles Schwab to resume the post of CEO. The company also unveiled a 10 per cent drop in its second-quarter profits.