IBM buyback, energy gains lift stocks
NEW YORK (Reuters) - Stocks rose for a third day on Tuesday as technology companies gained on IBM's plans to buy back $15 billion of its shares and the energy sector advanced on a record high close for oil in New York.
International Business Machines Corp. said the repurchases, equal to about 10 percent of its market capitalization, could boost 2008 earnings per share. The broader market responded favorably to the computer service company's confidence it could continue to generate cash in a difficult economy.
Energy shares were the top driver of the S&P's advance, with a weak dollar and geopolitical tensions driving the price of oil to a record closing high. Shares of Dow component Chevron Corp rose 1.1 percent to $88.12.
"IBM announced another buyback of shares. It helped, but I can't say why it's up so much," said Peter Boockvar, equity
strategist at Miller Tabak & Co. in New York. "The market has been in a trading range, and right now, we're in the upper end of that range, so it doesn't take much news here and there to get us moving."
The Dow Jones industrial average was up 114.70 points, or 0.91 percent, at 12,684.92. The Standard & Poor's 500 Index was up 9.49 points, or 0.69 percent, at 1,381.29. The Nasdaq Composite Index was up 17.51 points, or 0.75 percent, at 2,344.99.
IBM's stock climbed 3.9 percent to $114.38 and rose to its highest in about four months. The stock contributed the most to the Dow's gains.
On the New York Mercantile Exchange, April crude CLJ8 settled at a record $100.88 a barrel, up $1.65.
An S&P index of energy shares gained 1.4 percent, with Exxon Mobil up 0.9 percent at $89.89.
Moody's confirmation of bond insurer MBIA Inc's "AAA" rating helped the outlook for financial firms, some analysts said. The move comes a day after Standard & Poor's took MBIA's top rating off its credit watch. MBIA shares shot up 4.8 percent to $15.28.
In the retail sector, Target Corp shares rose 3.1 percent to $54.89. Its chief financial officer said the discount retail chain sees better sales growth in the second half of the year.
Also in the tech sector, Hewlett-Packard Co told a technology investment conference that the computer and printer maker remains confident about its previous earnings forecast, which was ahead of Wall Street's estimates.
HP's shares climbed 2.2 percent to $49.20.
The tech news and other positive factors overshadowed a report earlier in the day showing inflation making an unwanted comeback and another report that consumer confidence hit a 5-year low.
U.S. producer prices last month scored their biggest 12-month gain in more than 26 years, the government said, dealing a blow to investors' hopes for more Fed rate cuts to avert a recession. Continued...
