US stocks: Markets rise as Google lifts Nasdaq

NEW YORK - US stocks ended higher this morning as the coming inclusion of Google Inc. in the benchmark Standard & Poor's 500 index helped buoy the Nasdaq Composite index.
The S&P 500 and the Dow Jones industrial average finished a touch higher, amid expectations that weaker-than-expected housing data may give the Federal Reserve reason to signal an end to its campaign of interest-rate hikes when it meets next week.

The Dow Jones industrial average was up 9.68 points, or 0.09 per cent, at 11,279.97. The Standard & Poor's 500 Index was up 1.28 points, or 0.10 per cent, at 1,302.95. The Nasdaq Composite Index was up 12.67 points, or 0.55 per cent, at 2,312.82.

For the week, the Dow ended flat, while the S&P 500 slipped 0.3 per cent and the Nasdaq rose 0.3 per cent.

"If you look at the Nasdaq 100, it's being pushed by Google largely," said Rick Campagna, portfolio manager at Provident Investment Council in Pasadena, California. "That's the reason Nasdaq's up higher than everything else." Google shares jumped 7 per cent, or US$23.91, to US$365.80 on Nasdaq a day after Standard & Poor's said the company's stock listing would be added to the S&P 500 index on March 31.

Many index mutual funds base investments on whether a stock is included in the key stock market barometer, requiring them to buy Google shares.

The Fed's rate-setting Open Market Committee will meet on Monday and Tuesday. It is expected to lift the benchmark fed funds rate a quarter-percentage point to 4.75 per cent on Tuesday, when the meeting concludes. It will be the first FOMC meeting under Ben Bernanke, the Fed's new chairman..

"The question is: 'Are they going to change the wording of their statement?"' said Alfred Kugel, chief investment strategist at Atlantic Trust/Stein Roe.

Shares of Home Depot Inc. and Caterpillar Inc. were the two biggest drags on the Dow. Home Depot's stock slid 1.6 per cent, or 69 cents, to US$43.12, while Caterpillar shares fell 1 per cent, or 76 cents, to US$75.50, on the New York Stock Exchange.

On Thursday, Caterpillar hit a lifetime high, while Home Depot stock traded close to its 52-week high.

"You shouldn't read that much into them" falling, said Bart Barnett, head of listed trading at Morgan Keegan & Co. "You look at Home Depot; that has had a huge run lately. If you wanted an excuse for profit-taking in some of the bigger Dow names, that's probably exactly why they are down. Look at the moves they've had."

Stocks had gained earlier after a government report showed sales of new US homes plunged in February for the biggest drop in nearly nine years. The report raised hopes that the Fed will have less reason to extend its nearly 2-year-long campaign of rate hikes.

After the home sales data, the yield on the 10-year US Treasury note fell to 4.67 per cent from 4.74 per cent late on Thursday.

Shares of telecommunications-equipment maker Lucent Technologies Inc. jumped 8.5 per cent, or 24 cents, to US$3.06 after French rival Alcatel said it was in negotiations to buy the company.

The news helped spur buying of other telecommunications shares such as Ciena Corp., up 7.1 per cent, or 34 cents, at US$5.15, and Tellabs Inc., up 7.8 per cent, or US$1.11, at US$15.35.

Trading was moderately active on the NYSE, with about 1.48 billion shares changing hands, below last year's daily average of 1.61 billion, while on Nasdaq, about 1.93 billion shares traded, above last year's daily average of 1.80 billion.

Advancing stocks outnumbered declining ones by a ratio of about 3 to 2 on the NYSE and by about 2 to 1 on Nasdaq.

- REUTERS