Greenspan talk
revives stocks

NEW YORK » Stocks shook off early losses and closed higher yesterday after Federal Reserve Chairman Alan Greenspan delivered an upbeat assessment of the economy and Wall Street focused on solid earnings reported by a growing number of companies.

The Nasdaq composite index and the Standard & Poor's 500 hit new four-year highs.

The market opened lower as investors punished Intel Corp. and Yahoo Inc. after their earnings reports, issued following the close of regular trading Tuesday, fell below analysts' expectations. Stocks briefly slid further after Greenspan told Congress that the economy should enjoy sustained growth with low inflation in coming months, a sure sign incremental interest rate hikes would continue.

But the selloff didn't stick -- additional rate increases have long been expected. The market tends to fall when Greenspan starts talking and gain when he's done, said Todd Leone, managing director of equity trading at SG Cowen Securities.

"It's the uncertainty" that pushes stocks down, Leone said. "You never know what he's going to say, but today he said what everyone expected."

Investors also reconsidered the flow of earnings, which have been positive aside from a few high-profile disappointments.

The Dow Jones industrial average rose 42.59, or 0.40 percent, to 10,689.15.

Broader stock indicators also ended higher. The Standard & Poor's 500 rose 5.85, or 0.48 percent, to 1,235.20, its best close since July 2, 2001, and the Nasdaq composite index rose 15.39, or 0.71 percent, to 2,188.57, moving into positive territory for the year and reaching its highest point since June 18, 2001.

Bonds were higher, with the yield on the 10-year Treasury note falling to 4.18 percent from 4.19 late Tuesday. The dollar fell against the euro. Gold prices were higher.

Crude oil prices dropped more than $1 a barrel at one point after the Energy Department's weekly data on petroleum reserves was better than expected. A barrel of light crude settled at $56.72, down 74 cents on the New York Mercantile Exchange.

In stocks, investors pummeled the day's losers. Intel fell $1.27 to $27.44 after it reported strong earnings, but a gross margin below analysts' forecasts. Investors also ignored Yahoo's stellar earnings, instead focusing on how the results missed analysts' lofty expectations. The stock fell $4.33 to $33.40.