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World market indices rally

28 July 2009 09:18 (UTC +04:00)

Baku. Vahab Rzayev - APA-Economics. Mixed reports on the economy and earnings sent the stock market drifting on Monday, easing off a two-week rally that lifted major indexes 11 percent.
A government report said sales of new homes in the U.S. rose by the largest amount in nearly nine years last month, but it also said home prices fell sharply from a year earlier. Homebuilder stocks rose, but other industries were mixed.
In late afternoon trading, the Dow Jones industrial average rose 2.72, or less than 0.1 percent, to 9,095.96. The broader Standard & Poor’s 500 index rose 1.51, or 0.2 percent, to 980.77, while the Nasdaq composite index slipped 0.40, or less than 0.1 percent, to 1,965.65.
Advancing stocks outnumbered those that fell by 3-to-2 on the New York Stock Exchange, where volume came to 628.2 million shares compared with 667.8 million traded at the same point Friday.
Bond prices fell, pushing yields higher. Prices showed little change after decent demand at a government bond auction. The yield on the benchmark 10-year Treasury note rose to 3.71 percent from 3.66 percent late Friday.
In economic news, the Commerce Department said new home sales rose 11 percent in June to 384,000, more than expected and the strongest pace since November 2008. But the median sales price of $206,200 was down 12 percent from $234,300 a year earlier and off nearly 6 percent from $219,000 in May. Last week, stocks got a lift from a separate report a better than expected sales of existing homes.
Among companies posting results, RadioShack Corp. fell 89 cents, or 5.5 percent, to $15.17 after cost-cutting drove profit growth and sales fell short of analysts’ expectations.
Aetna’s profit skidded 28 percent on higher medical expenses in its commercial business, and the health insurer cut its profit forecast for the second time in two months. The stock fell 73 cents, or 2.8 percent, to $25.71.
Corning said its second-quarter earnings tumbled from results inflated by a big one-time gain a year ago. The stock fell 65 cents, or 3.8 percent, to $16.35.
Among homebuilders, Beazer Homes USA Inc., or 13.1 percent, to $2.93 while Hovnanian Enterprises Inc. rose 28 cents, or 9.8 percent, to $3.13.
Investors have been buying stocks as companies from AT&T Inc. to chip maker Intel Corp. post earnings that are far stronger than analysts had predicted. Others, like heavy equipment maker Caterpillar Inc., have raised expectations for later in the year.
The reports have given investors the confidence to restart a rally that began in March, sending the S&P 500 rocketing 40 percent off a 12-year low before stalling in mid-June. The past two weeks have erased the monthlong slide and given new strength to the rally.
But some analysts remain cautious because expectations were low going into the weeks in which companies report results from the April-June quarter.
"Last week was dubbed as a good earnings week, but good compared to what?" asked David Hefty, CEO of Cornerstone Wealth Management in Auburn, Ind. "It doesn’t take a lot to get the market excited these days."
The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose 32 cents to $68.37 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 1.15, or 0.2 percent, to 549.61.
Overseas, Japan’s Nikkei stock average rose 1.5 percent. Britain’s FTSE 100 rose 0.2 percent, Germany’s DAX index rose 0.4 percent, and France’s CAC-40 rose 0.2 percent.