Star-Bulletin news services
Earnings overcome
interest rate worries
U.S. stocks rose as higher-than-forecast earnings from companies including Motorola Inc. and Ford Motor Co. helped the market rebound from losses tied to concern that interest rates may increase.
"Investors are worried about higher rates, but boy, we're getting some great earnings numbers too," said Patrick Becker, who helps manage $2.2 billion for Becker Capital Management in Portland, Ore.
Share prices advanced after Federal Reserve Chairman Alan Greenspan, in a second day of congressional testimony, said the economy's expansion had yet to bring "broad-based" inflation. Greenspan roiled investors yesterday when he suggested the Fed may raise rates sooner than some expected.
The Standard & Poor's 500 Index added 5.94, or 0.5 percent, to 1,124.09 after losing as much as 0.2 percent before Greenspan's testimony. The benchmark has risen four of the last five days. The Nasdaq Composite Index gained 17, or 0.9 percent, to 1,995.63.
United Technologies Corp. fell, weighing on the Dow Jones Industrial Average, after the company left its profit forecast unchanged for this year. The Dow rose 2.77 to 10,317.27.
The price of the Treasury's 10-year note closed up 316 point, while its yield fell to 4.43 percent from 4.45 percent Tuesday. Two-year Treasury notes were down1 32 point and yielded 2.17 percent, up from 2.15 percent Tuesday.
The S&P 500 yesterday had its steepest drop since Sept. 24 after Greenspan told a Senate committee that banks can adjust to higher borrowing costs and companies appear to have an easier time raising prices. His remarks Tuesday and today hint at an interest rate increase as soon as August, some economists said.
Better-than-expected earnings today helped limit the concern that higher borrowing costs will crimp future corporate profit growth. About 74 percent of the 189 companies in the S&P 500 that have reported first-quarter results have exceeded analysts' expectations, according to Thomson Financial.
Profit growth for S&P 500 companies may have risen 23 percent in the quarter, up from a forecast of 13 percent when the period began, according to Thomson.
Motorola, the world's second-largest maker of mobile phones, surged $3.08, or 19 percent, to $19.30, for the biggest gain in the S&P 500. Quarterly profit, excluding some items, was 19 cents a share, almost three times the average forecast of 7 cents in a Thomson survey.
Motorola is winning market share with phones that include cameras, color screens and music players.
Ford, the second-largest U.S. carmaker, climbed $1.38, or 10 percent, to $14.94. Profit excluding some items was 96 cents a share in the first quarter, bolstered by cost cuts and record earnings from car loans. That was more than double the 44 cents analysts expected.
STOCK QUOTES/CHARTS/DATA
