Consumer spending
report lifts stocks

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Amy Baldwin
Associated Press

NEW YORK >> Relieved investors sent stock prices sharply higher today as the last of companies' second-quarter earnings trickled in. But Wall Street was unable to hold its best gains of the day, an expected turn of events given the market's tenuous state of health.

A positive report on consumer spending contributed to the rally, while disappointing readings on consumer confidence and manufacturing appeared to have little effect on trading.

"It is the end of the bottoming out phase. It is the next up leg of the next bull market," said Charles H. Blood Jr., senior financial markets analyst at Brown Brothers Harriman & Co.

Others noted that a rally was to be expected with companies just about finished issuing their reports, which have been largely disappointing and often accompanied by warnings of weak results ahead. But rallies will be vulnerable until earnings and the economy show signs of recovery. "I'll give it the benefit of the doubt for right now," said Todd Clark, co-head of trading at WR Hambrecht.

The Dow finished today up 121.09 at 10,522.81, after having risen as much as 191 points in earlier trading. The Nasdaq composite index advanced 9.29 to 2,027.13, but like the Dow, it fell back from an earlier 39-point rise. The Standard & Poor's 500 index picked up 6.71, rising to 1,211.23.

Advancers outnumbered decliners slightly more than 3 to 2 on the New York Stock Exchange, with 1,899 up, 1,217 down and 224 unchanged. Volume was 1.13 billion shares vs. 902.95 million yesterday. The NYSE composite index rose 3.09 to 616.94, the American Stock Exchange composite index gained 5.40 to 896.21 and the Russell 2000 index edged up 0.07 to 484.78. The Treasury's 10-year note rose 132 to 99 1732; its yield was unchanged at 5.06 percent. The 30-year bond fell 732 to 97 2532; its yield rose 2 basis points to 5.53 percent.

Wall Street was heartened by the government's report that consumer spending -- which accounts for two-third's of the nation's economy -- rose 0.4 percent and income increased by 0.3 percent in June.

Analysts were more encouraged that the market advanced despite two disappointing reports on consumer confidence and manufacturing activity.

The New York-based Conference Board said today its Consumer Confidence Index skidded in July for the first time since April, reflecting ongoing worries about jobs and the future of the U.S. economy.

The Purchasing Management Association of Chicago index of area business activity fell sharply in July. The Chicago survey is watched closely for clues to the index of the National Association of Purchasing Management, which will release July results tomorrow.

"When the market reacts well in the face of negative news, that is reason to pay attention ... It's got me thinking that maybe this is something to believe," Clark said.

However, he also said there was reason to question the market's surge, which could have more do with the fact that the last of second-quarter earnings are now trickling in rather than companies suddenly being able to project business improving.

Today's advance was spread across an array of sectors and many stocks' gains were substantial, signs that investors simply were in the mood to buy. 3M climbed $2.63 to $111.88, Merck rose $1.73 to $67.98 and Intel advanced 77 cents to $29.81. All three are Dow industrials.

Losers included companies that reduced their outlooks for the future. Verizon, which met earnings expectations, fell $1.87 to $54.69 after reducing its outlook for the year.

World Wrestling Federation Entertainment, which offered fiscal 2002 revenue growth targets that suggest weak first-quarter growth, tumbled $2.39 to $10.50.

The market ended July mostly lower. The Dow gained 20.41, a 0.2 percent increase, but the Nasdaq lost 133.41, or 6.2 percent. The S&P, Wall Street's broadest measure, ended the month with a loss of 13.15 points, or 1.1 percent.

After the market closed, Priceline.com Inc. reported its first profit as the No. 3 Internet travel seller cut expenses and had better-than-expected sales.

Priceline.com had second-quarter net income of $2.8 million, or 1 cent per share, com- pared with a loss of $11.7 million, or 7 cents, a year earlier. Revenue rose 3.6 percent to $364.8 million from $352.1 million. Priceline.com's stock, which was up 38 cents to $8.87 in the regular session, soared to just under $10 in after-hours trading. Its shares had soared 576 percent year-to-date before announcing its earnings.

Overseas, Japan's Nikkei stock average rose up 2.4 percent.