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US stocks: Dow closes at record on earnings

The Dow closed at a record on Tuesday, striking above the 14,000 mark for the first time, and the Nasdaq rose to a six-and-a-half-year high.
Reuters | By HT Correspondent, New York
UPDATED ON JUL 18, 2007 05:18 AM IST

The Dow closed at a record on Tuesday, striking above the 14,000 mark for the first time, and the Nasdaq rose to a six-and-a-half-year high on a cascade of stronger-than-expected earnings.

But weakness in energy stocks and lingering worries about the subprime mortgage market held back the advance of the broader S&P 500, which closed virtually unchanged.

A brokerage upgrade of American Express Co pushed the credit-card company's stock up 4.6 per cent and helped lift the Dow average of 30 blue-chip stocks.

Semiconductor stocks gained after Novellus Systems Inc reported stronger-than-expected results.

"Earnings that have come out so far have been supporting the market. There have been no big disappointments," said Subodh Kumar, investment strategist at Subodh Kumar & Associates in Toronto.

The Dow Jones industrial average gained 20.57 points, or 0.15 per cent, to end at 13,971.55. The Standard & Poor's 500 Index <.SPX> was down just 0.15 of a point, or 0.01 per cent, at 1,549.37. The Nasdaq Composite Index rose 14.96 points, or 0.55 per cent, to close at 2,712.29, after climbing intraday to 2,719.94, its highest in six-and-a-half years.

Energy stocks fell, led by Exxon Mobil on concern about dwindling profit margins for gasoline. Exxon shares slipped 0.7 per cent to $89.09.

Worries about the subprime mortgage market also continued to rumble.

Merrill Lynch & Co was among companies that posted earnings that exceeded estimates, but its stock erased early gains after its chief financial officer said in a conference call that the market for subprime collateralised debt has yet to stabilise. Its shares slipped 1.4 per cent to $86.20.

Other financial companies whose earnings topped forecasts were State Street Corp, Jefferies and KeyCorp. The gains helped push the the S&P financial index up 0.5 per cent.

Shares of State Street, the world's biggest institutional money manager, added 2.1 per cent to $71.87. Jefferies shares rose 3.6 per cent to $29.75, while KeyCorp gained 4.6 per cent to $36.71.

The Dow set an intraday record high of 14,021.95, crossing 14,000 just under three months since it rose above the 13,000 mark for the first time, and then retreated before the close.

"This is a typical bull market in that it is climbing a wall of worry -- there continues to be Iraq, terrorism, inflation and high interest rates, and still the market goes up," said Carl Birkelbach, founder, chairman and CEO of Birkelbach Investment Securities, Inc, in Chicago.

The S&P materials index gained 0.6 per cent, after paint and coatings makers Rohm and Haas Co said late on Monday its board of directors authorised the repurchase of up to $2 billion of its common shares. Rohm shares shot up 9.9 per cent to $61.27.

American Express stock rose 4.6 per cent to $64.74 following an upgrade by Goldman Sachs, which said American Express' network business was undervalued by the market.

Takeover activity also helped stocks. Lyondell Chemical shares surged 17.3 per cent to $47.05 and ranked near the top of the Big Board's list of biggest percentage gainers after chemical maker Basell said it would buy the company for $48 a share in an all-cash deal.

Trading was moderate on the NYSE, with about 1.44 billion shares changing hands, below last year's estimated daily average of 1.84 billion.

On the Nasdaq, about 2.22 billion shares traded, above last year's daily average of 2.02 billion.

Declining stocks outnumbered advancing ones by a ratio of about 19 to 14 on the NYSE, while advancers slightly outnumbered decliners on Nasdaq.

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