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Get Four
|  | MAY 17, 2005 04:29 PM
Stocks End HigherThe major indexes turn positive in late trading after the U.S. Treasury called on China to change its currency policyStocks finished higher on Tuesday after a U.S. Treasury report put pressure on China to stop pegging its currency to the greenback, which could help narrow the U.S.' widening trade gap. The news helped the major indexes recover from losses earlier in the session over a higher-than-expected reading on a key gauge of wholesale-level inflation. The Dow Jones industrial average ended up 78.59 points, or 0.70%, to 10,331.88. The broader Standard & Poor's 500 index added 8.11 points, or 0.70%, to 1,173.80. The Nasdaq composite index gained 9.72 points, or 0.49%, to 2,004.15. Looking ahead to Wednesday, economics news will likely take center stage again as investors parse a report on consumer level inflation in the U.S. economy. The consumer price index (CPI) is seen rising 0.5% in April, vs. a 0.6% jump in March. Stripping out volatile food and energy prices, the CPI is seen increasing by 0.3%, vs. 0.4% in the previous month. Investors are likely to stay closely tuned to the report after Tuesday's Producer Price Index (PPI) figures were stronger than expected. Wednesday's earnings calendar features scheduled quarterly reports from tech outfits Intuit (INTU ) and BEA Systems (BEAS ). On Tuesday, the major indexes reversed course late in the session after the U.S. Treasury issued a report that warned Beijing about stopping the pegging of the Yuan to the U.S. dollar. The department called on China to begin a smooth transition or risk being branded a currency manipulator. But the language was less aggressive than some had expected, says S&P's MarketScope, easing concern over trade tensions with China. Also helping drive up the indexes were positive results from several large retailers. The leader was Home Depot (HD ), the largest U.S. home improvement retailer, which posted a more than 13% rise in profits profit thanks to revenue gains. Department-store chain JCPenney (JCP ) said its quarterly profits rose more than fourfold due to stronger sales and a boost in its Web business. Staples (SPLS ), the largest U.S. office-supplies retailer, reported that profits rose more than expected on higher sales in the U.S. and abroad. Bookseller Barnes & Noble (BKS ) posted lower profit but the results met the high end of the company's guidance. Energy and basic materials stocks also rebounded from losses on Monday, says S&P. Keeping a lid on gains, however, was news that the producer price index (PPI) for April was firmer than expected, with headline finished producer goods rising 0.6%, vs. expectations for a 0.5% rise. Core finished goods prices, which strips out volatile food and energy prices, rose just 0.3%, vs. a 0.2% median estimate. Gasoline prices were up 2.6%, tobacco rose 1.0%, and cars increased 0.5%. Intermediate goods prices rose 0.8%, with core intermediate prices up 0.2%. In other equities news, farm and construction equipment outfit Deere (DE ) posted 27% higher profits that topped Wall Street's expectations thanks to a buying rebound for its equipment. Stock and mutual fund researcher Morningstar (MORN ) posted 11% lower first quarter profits. The company went public earlier this month. In other economics news, new home construction in April topped expectations. Housing starts came in at a 2.038 million annualized pace, vs. a revised 1.836 million pace in March (initially reported at 1.873 million). Expectations had centered around 2.000 million, according to Informa Global Markets. But U.S. industrial production data for April were soft, down 0.2% on the month (vs. expectations of a 0.2% rise), says Informa, with factory output flat. Utility output fell 2.3% in the month, so the headline production figure is skewed a bit below what otherwise would have been seen, Informa adds. Auto output fell by 3.5% in the month, with industrial production ex-autos up a slight 0.1%. Capacity use in April stood at 79.2%, vs. an unrevised 79.4% in March, while factory capacity use was 77.9%, down 0.1% on the month. Meantime, June crude oil futures rose 48 cents to $48.97 a barrel. OPEC released its monthly oil report, saying the oil cartel can "readily accommodate" fourth quarter oil demand. The report also said oil prices will drop as speculation eases. Treasury Market Treasuries ended slightly higher in price Tuesday with the yield on the benchmark 10-year note falling to 4.12%. The reaction to the day's economic data was muted. Strong housing did not surprise the Street, says Informa. But the PPI data, while on the surface stronger than expected, showed underlying factors that are subdued enough to keep the Fed's "measured pace" on fighting inflation, Informa says. World Markets European stocks closed mixed on Tuesday. In London, the FTSE 100 was up 14.30 points, or 0.29%, to 4,898.50 as the consumer price index rose 0.4% in April, same as in March. Inflation remains below the Bank of England's targets. Germany's DAX index fell 10.41 points, or 0.24%, to 4,251.77 after the Bundesbank said first quarter gross domestic growth was overstated due to inaccurate adjustments for the number of working days both in the 2004 fourth quarter and 2005 first quarter. In Paris, the CAC 40 index lost 4.79 points, or 0.12%, moving to 4,006.19 as oil prices rise. STMicroelectronics was lower after the company said it would take up to $130 million in charges to cut jobs over the next year. Asian markets finished lower Friday. Japan's Nikkei 225 index fell 121.83 points, or 1.11%, to 10,825.39 as profit-taking in mid- and small-cap plays outweighed news of 5.3% growth in Q1 GDP, the fastest pace in a year. In Hong Kong, the Hang Seng index fell 199.78 points, or 1.44% to 13,667.03 with properties, industrials, and financials trending lower. 
BW MALL
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