Stocks surge after GM earnings By MADLEN READ, AP Business Writer

Stocks surge after GM earnings By MADLEN READ, AP Business Writer
18 minutes ago



NEW YORK - Stocks surged Tuesday, as strong earnings from General Motors Corp. and Sun Microsystems Inc. helped Wall Street extend its recovery from last week's plunge.

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Investors were also eager to buy back into the stock market after economic snapshots suggested tame inflation and rising consumer confidence.

The market seemed to be focusing on the good news and ignoring the negative. 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 data also showed that personal spending rose 0.1 percent, its slowest pace in nine months.

And as a report from the Conference Board indicated that consumer confidence jumped to a six-year high, the market looked past a dip in June construction spending, and the July Chicago purchasing manager's index, which 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.

The stock market's rebound this week follows last week's sharp plunge, which was fueled by worries that a deteriorating lending environment would dampen dealmaking and growth.

In the first hour of trading, the Dow Jones industrial average rose 78.52, or 0.59 percent, to 13,436.83, after rising more than 120 points earlier.

Broader stock indicators also rose. The Standard & Poor's 500 index was up 7.25, or 0.49 percent, at 1,481.16, and the Nasdaq composite index was up 14.59, or 0.56 percent, at 2,597.87.

Bonds were little changed after the mixed economic data. The 10-year Treasury note's yield was at 4.81 percent, the same as late Monday.

The dollar was mixed against most other major currencies. Gold prices rose.

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.

Crude oil futures rose 72 cents to $77.55 a barrel on the New York Mercantile Exchange. Their previous record close was $77.03 a barrel, reached in July 2006.

GM rose $1.74, or 5.3 percent, to $34.35 after releasing its better-than-expected quarterly earnings. The company said it benefited from higher sales in markets worldwide.

Sun Microsystems soared 40 cents, or 8.3 percent, to $5.29.

In addition to earnings, merger-and-acquisition activity lifted the market. 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 getting closer to a deal.

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 more than 3 percent.

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 $1.64, or 4.4 percent, to $39.13.

The Russell 2000 index of smaller companies was up 7.44, or 0.95 percent, at 791.67.

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 was up 2.33 percent, Germany's DAX index was up 1.71 percent, and France's CAC-40 was up 1.56 percent.

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On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

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