US stocks: Blue chips rise, Nasdaq dips

By Megan Davies

NEW YORK - US blue-chip stocks ended modestly higher on Wednesday, helped by a dip in crude oil prices and gains by financial stocks.

Financial services companies' shares were aided by a dip in US Treasury bond yields. Shares of Bank of America Corp. climbed 0.7 per cent, or 29 cents, to $44.60, while the stock of Citigroup Inc., a Dow component, rose 0.5 per cent, or 21 cents, to $45.15.

But a 2.5 per cent drop in shares of Dell Inc., the world's largest personal computer maker, weighed on Nasdaq, ahead of the company's release of an outlook statement at an annual briefing for Wall Street analysts.

After the closing bell, Dell reaffirmed its first-quarter outlook. Its shares, which fell 98 cents to USUS$38.15 during the regular session, rose 1 per cent on the Inet electronic exchange to USUS$38.59.

The Dow Jones industrial average was up 27.56 points, or 0.26 per cent, to close at 10,486.02. The Standard & Poor's 500 Index was up 2.68 points, or 0.23 per cent, to end at 1,184.07. The technology-laced Nasdaq Composite Index was down just 0.18 of a point, or 0.01 per cent, to finish at 1,999.14.

It marked the third consecutive day of gains for the Dow and the S&P 500 -- the first time there have been three straight sessions of gains in more than a month.

US light crude for May delivery settled down 19 cents to end at USUS$55.85 a barrel, after a rollercoaster day. It closed sharply below Monday's all-time high of USUS$58.28. High oil prices tend to hurt consumer spending and corporate profits, so a fall in prices generally helps the market.

Some stocks sensitive to oil prices, such as industrials, gained. Heavy equipment maker Caterpillar Inc. jumped USUS$1.03, or 1 per cent, to USUS$91.39, while United Technologies Corp. gained 63 cents, or 0.6 per cent, to USUS$100.39. Both are among the 30 stocks in the blue-chip Dow average.

Despite the slip in oil prices, shares of energy companies moved higher. Exxon Mobil Corp. rose 84 cents, or 1.4 per cent, to USUS$60.90, and was among the Dow's biggest percentage gainers, while rival ConocoPhillips, an S&P 500 component, shot up USUS$2.55, or 2.4 per cent, to USUS$110.87.

"Energy stocks in general led things higher despite the fact that oil was mixed," said Brian Pears, head of equity trading at Victory Capital Management in Cleveland.

"The financials seem to have come back to life after underperforming for quite some time, and I think we can credit the fact that interest rates have gone a bit lower over the last week as a catalyst -- it's people feeling that financials tend to do better in low rate environments. "

The benchmark 10-year note rose 11/32 in price, to 96-19/32 with its yield ticking back down to 4.43 per cent from 4.47 per cent late on Tuesday.

Mortgage finance companies Fannie Mae and Freddie Mac gained, with Fannie up USUS$1.87, or 3.6 per cent, at USUS$54.15 and Freddie up USUS$2.04, or 3.3 per cent, at USUS$63.80.

Federal Reserve Chairman Alan Greenspan on Wednesday told Congress it must curb the rapid growth of the two mortgage finance groups, in testimony before the Senate Banking Committee, just as a US regulator unveiled new accounting problems at Fannie Mae. But both mortgage giants' shares rose on investor confidence that any bill Congress passes will be milder on the companies' profit-driving business than feared.

Chip stocks got a lift from Merrill Lynch raising its rating on chip makers Altera Corp., Maxim Integrated Products Inc. and Broadcom Corp. to "buy" from "neutral." Altera rose 14 cents to USUS$19.68, Maxim gained 46 cents to USUS$40.86, and Broadcom advanced 31 cents to USUS$30.07.

Anheuser-Busch Cos. Inc. fell 3.8 per cent, or USUS$1.79, to USUS$45.65, a day after it lowered its 2005 earnings-per- share growth forecast for the second time this year, citing lower-than-expected US beer sales volume.

Trading was moderate, with 1.43 billion shares changing hands on the New York Stock Exchange, around the same as the 1.46 billion daily average for last year. About 1.76 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year. Advancers outnumbered decliners on the New York Stock Exchange by about 5 to 3 and by 8 to 7 on Nasdaq.

- REUTERS