Markets & Finance

Stocks Edge Higher After Speeches


Remarks from Fed officials steered away from policy and the broader economy. Treasury Secretary Paulson defended Bush's $2.9 trillion budget

Stocks finished slightly higher Tuesday, after speeches from Treasury Secretary Henry Paulson and key Federal Reserve officials provided little new information on the broader economy or policy. Investors were also digesting solid earnings news in a quiet session for economic data. Weaker index futures triggered some profit-taking, while the final hour likely saw some bargain-hunting, says Standard & Poor's Equity Research

On Tuesday, the Dow Jones industrial average nudged higher 4.57 points, or 0.04%, to 12,666.31. The broader Standard & Poor's 500 index added 1.01 points, or 0.07%, to 1,448. The tech-heavy Nasdaq composite edged up 0.89 points, or 0.04%, to 2,471.49.

NYSE breadth was positive, with 21 issues advancing for every 12 declining. Nasdaq breadth was 17-13 positive.

In testimony before the House Ways and Means Committee, Paulson reiterated a goal of balancing the budget within five years. "Our economy appears to be transitioning from a period of above-trend growth to a more sustainable level of about 3%," he said.

Congress was expected to provide some resistance to the budget, which calls for more military spending at the expense of domestic programs, says Action Economics.

Elsewhere, Fed Chairman Ben Bernanke and Chicago Fed President Michael Moskow gave speeches but stayed away from comments on the broader economy or monetary policy. San Francisco Fed President Janet Yellen was slated to speak after the close.

The economic calendar remains relatively light Wednesday. The release of fourth-quarter nonfarm productivity is expected to increase 2.5% after a 0.2% gain in the third quarter, says Action Economics.

Among Tuesday's stocks in the news, Tyco (TYC) was lower after the conglomerate reported a 43% rise in earnings for its fiscal first quarter.

BP (BP) was lower after the oil producer said fourth-quarter profit fell 22%.

Shares of Las Vegas Sands (LVS) fell after the casino operator acknowledged that much of its 3.3% increase in fourth-quarter profit stemmed from unusually good luck at high-minimum table games at its Venetian hotel and casino in Las Vegas.

On the upside, Toyota (TM) was higher after the Japanese company posted record profit for the October-December quarter as it nears General Motor's (GM) position as the world's largest automaker.

Meanwhile, Cisco (CSCO) was slightly lower before announcing quarterly results following the closing bell. The networking equipment maker was expected to post earnings of 31 cents per share on $8.3 billion in revenue, up from 26 cents per share on $6.6 billion a year earlier, says Reuters Estimates.

Companies set to report earnings Wednesday include Cigna (CI), Devon Energy (DVN), and Disney (DIS).

Outside of earnings Tuesday, Ford (F) was higher after the automaker said it will bring back the once-popular Taurus name for its currently slow-selling Five Hundred model.

Eastman Kodak (EK) was higher following the launch of the digital imaging company's new "all-in-one" printer.

Tech stocks were hampered by a revenue warning from National Semiconductor (NSM). UBS lowered its recommendation for the chipmaker from buy to neutral following reduced fiscal third-quarter sales guidance.

Microsoft (MSFT) was lower despite Bank of America upgrading the software maker from neutral to buy.

Apple (AAPL) was little changed after CEO Steve Jobs called on music companies to stop selling songs online with digital rights management, or DRM.

In the energy markets, March West Texas Intermediate crude oil futures rose 14 cents to $58.88 ahead of Wednesday's weekly inventory report.

European markets finished narrowly mixed. The FTSE-100 index in London rose 28.4 points, or 0.45%, to 6,346.3. Germany's DAX index added 1.64 points, or 0.02%, to 6,875.7. In Paris, the CAC 40 index edged down 4.33 points, or 0.08%, to 5,676.78.

Asian markets ended higher. In Japan, the Nikkei 225 index gained 62.06 points, or 0.36%, to 17,406.86. In Hong Kong, the Hang Seng index climbed 199.58 points, or 0.98%, to 20,655.2. Korea's Kospi index advanced 10.63 points, or 0.75%, to 1,428.58.

Treasury Market

Treasury yields ticked lower, giving back earlier gains with help from firm support for the Treasury Department's three-year note auction. The 10-year note rose in price to 98-29/32 for a yield of 4.76%, while the 30-year bond advanced to 94-10/32 for a yield of 4.87%.

Hogan is a reporter for BusinessWeek.com in New York.

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