US Stocks: Dow rises on US housing data

NEW YORK - US blue-chip stocks rose on Tuesday, led by gains in Caterpillar Inc., as stronger-than-expected housing data eased concerns about an economic slowdown.

But the Nasdaq Composite Index ended slightly lower, hurt by declines in the shares of small pharmaceutical and biotechnology companies. The S&P 500 finished almost flat.

Grocer Kroger Co. reported earnings that beat expectations and JP Morgan lifted its rating on Costco Wholesale Corp., which supported the market.

Shares of companies sensitive to economic cycles rose, such as Caterpillar, a heavy equipment maker, and Procter & Gamble Co., a consumer products company and Dow component.

The Commerce Department said US housing starts in May rose faster than economists forecast, but permits for future projects declined.

"Companies in the Dow, such as Caterpillar, are in good position to absorb higher interest rates," said Edgar Peters, chief investment officer of Boston-based PanAgora Asset Management Inc., with US$15 billion in assets.

"The housing data came as a relief for some investors and it's natural that buying was concentrated on the Dow components."

The Dow Jones industrial average rose 32.73 points, or 0.30 per cent, to end at 10,974.84. The Standard & Poor's 500 Index inched down just 0.02 of a point, or unchanged on a percentage basis, to 1,240.12. The Nasdaq Composite Index slipped 3.36 points, or 0.16 per cent, to close at 2,107.06.

Caterpillar rose 1.5 per cent, or US$1.04, to US$70.99 on the New York Stock Exchange, while Procter & Gamble advanced 1.3 per cent, or 71 cents, to US$55.58.

Kroger, the No. 1 US grocery chain, reported results, excluding charges, that beat analysts' estimates, driving its stock up 5.2 per cent, or US$1.01, to US$20.47. Its gain helped curb the S&P 500's decline.

The consumer staples sector also got a lift from Costco, which rose 2.5 per cent, or US$1.33, to US$54.88 after the JP Morgan upgrade to "overweight."

The Nasdaq's biggest percentage loser was Praecis Pharmaceuticals Inc., whose shares sank 33.4 per cent, or US$1.72, to US$3.43 after the company said it will stop seeking a buyer for its Plenaxis prostate cancer drug assets. Praecis also said it will take steps with US regulators to discontinue distribution of the product in the United States.

Shares of Apollo Group Inc., a for-profit education company, also fell on Nasdaq. Apollo's shares slid 5.3 per cent, or US$2.91, to US$51.91 on Nasdaq after it said quarterly earnings fell 6 per cent and revenue was below analysts' forecasts. It was among the biggest negative influences on the Nasdaq.

The stock of food and tobacco group Altria Group Inc., a Dow component, rose 0.8 per cent, or 55 cents, to US$71.89, a day after a favorable court ruling. On Monday, the Illinois Supreme Court ruled that a US$2.15 billion bond posted by cigarette maker Philip Morris USA, should be returned to the Altria unit, which won an appeal last year.

Even though the Dow ended higher and the S&P 500 closed flat, more stocks fell than rose in Tuesday's session. Declining stocks outnumbered advancing ones by a ratio of about 9 to 7 on the NYSE and by 8 to 7 on Nasdaq.

Trading was moderate on the NYSE, with about 1.50 billion shares changing hands, below last year's daily average of 1.61 billion, while on Nasdaq, about 1.62 billion shares traded, below last year's daily average of 1.80 billion.

- REUTERS