NEW YORK — Wall Street showed further signs of stability Tuesday, rising sharply on strong earnings at General Motors Corp. and Sun Microsystems Inc. even as investors grappled with a batch of mixed economic data.
Though the Commerce Department's year-over-year core personal consumption expenditures — a closely watched inflation measure — was up 1.9 percent in June and within the Federal Reserve's comfort zone, the report also showed that personal spending last month rose 0.1 percent, its slowest pace in nine months.
And while a report from the Conference Board indicated that consumer confidence jumped to a six-year high, June construction spending dipped and the July Chicago purchasing manager's index indicated weaker-than-expected growth. The report is considered a precursor to the Institute for Supply Management's national manufacturing index, which will be released Wednesday.
Nonetheless, the stock market was optimistic on the whole, thanks in large part to better-than-expected earnings from automaker GM and Sun Microsystems, which makes networking equipment. The stock market's rebound this week follows last week's sharp pullback, which was fueled by persistent worries that a deteriorating lending environment will make it harder for companies to borrow money.
"The bottom line is volatility has picked up, and it's going to continue to pick up," said Jeff Schappe, chief investment officer at BB&T Asset Management, adding that there's potential for the market to drop another 5 percent. Last week, the Dow Jones industrial average tumbled about 5 percent from its record close of 14,000.41, reached earlier in July.
"I think investors need to not focus on the day-to-day volatility in the market, and look at the longer term," Schappe said. He noted that while credit jitters will keep riling the market for a while, the long-term view looks positive.
In midday trading, the Dow Jones industrial average rose 71.53, or 0.54 percent, to 13,429.84, after rising more than 120 points earlier.
Broader stock indicators also advanced. The Standard & Poor's 500 index advanced 7.02, or 0.48 percent, to 1,480.93, and the Nasdaq composite index added 6.34, or 0.25 percent, to 2,589.62.
Bonds rose slightly after the mixed economic data. The 10-year Treasury note's yield dipped to 4.80 percent from 4.81 percent late Monday.
The dollar was mixed against most other major currencies. Gold prices rose.
GM rose 82 cents, or 2.5 percent, to $33.43 after releasing its better-than-expected quarterly earnings. The company said it benefited from higher sales in markets worldwide.
Sun Microsystems soared 35 cents, or 7.2 percent, to $5.24.
Though core inflation — which strips out volatile food and energy prices — has been registering at fairly mild levels, many investors are still concerned that energy prices will keep crimping consumer spending.
Oil prices crossed $78 a barrel in midday trading on the New York Mercantile Exchange. Prices reached a previous intraday peak at $78.40 a barrel on July 14, 2006.
Investors also remain worried about credit getting tighter due to the faltering housing market. On Tuesday, a housing index released by Standard & Poor's showed that U.S. home prices fell for a fifth consecutive month in May by the steepest drop in about 16 years.
However, merger and acquisition activity hasn't appeared to be dampened yet by tougher lending standards.
Billionaire investor Nelson Peltz's Triarc Cos. said he is willing to offer $37 to $41 a share to buy Wendy's International Inc., while the Wall Street Journal reported that its parent company, Dow Jones & Co., and Rupert Murdoch's News Corp. are close to a deal. The Bancroft family, controlling shareholders of Dow Jones, agreed to vote in favor of News Corp's bid, the newspaper reported.
Wendy's rose $1.59, or 4.7 percent, to $35.28.
Dow Jones rose $6.29, or 12.2 percent, to $57.85, while News Corp. rose 6 cents to $22.90.
In other corporate data, Sirius Satellite Radio Inc. posted a second-quarter net loss that was narrower than last year and smaller than Wall Street anticipated. Sirius rose 11 cents, or 3.7 percent, to $3.08.
Waste Management Inc. reported a 20 percent decline in second-quarter profit compared with a year ago, when the company benefited from a large tax-audit settlement. But the nation's largest garbage hauler hiked its full-year guidance, and its stock rose $2.38, or 6.4 percent, to $39.87.
The Russell 2000 index of smaller companies advanced 6.48, or 0.83 percent, at 790.71.
In Asian trading, Japan's Nikkei stock average fell 0.23 percent, Hong Kong's Hang Seng index jumped 1.96 percent, and China's Shanghai Composite Index rose 0.7 percent to a new record.
In European trading, Britain's FTSE 100 rose 2.48 percent, Germany's DAX index advanced 1.71 percent, and France's CAC-40 rose 1.85 percent.
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