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Date Posted: 00:34:48 08/10/12 Fri
Author: 09/08/2012 5:52AM ==reporting wednesday 8/8/2012==76 US
Subject:

U.S. Stocks Mixed; Consumer Staples, Health Care Companies Lead

U.S. Stocks Mixed; Consumer Staples, Health Care Companies Lead
09/08/2012 5:52AM
By Jonathan Cheng

Stock market bulls struggled to notch up a fourth consecutive day of gains, building on a three-day rally that has pushed the Dow Jones Industrial Average to a three-month high.

The blue-chip Dow added 15 points, or 0.1%, to 13184 in late Wednesday trading and the Standard & Poor's 500-stock index gained one point, or 0.1%, to 1403. The Nasdaq Composite slipped three points, or 0.1%, to 3013.

The gyrations come after a three-day run that tacked 290 points onto the Dow and pushed the blue-chip measure to its highest level since May. The Dow is now less than 100 points from a December 2007 high, and 7% from its all-time high.

Helping lift the markets were consumer staples and health care stocks. Hewlett-Packard led the blue-chip components, gaining 2.3% after the tech giant raised its earnings forecast for the third quarter and named new leaders for its enterprise services division.

Alcoa was also strong, adding 2%. Wal-Mart Stores continued its recent strength, rising 1.2% to within reach of its all-time high.

"Given that we avoid those landmines--the European situation and the fiscal cliff looming--the recovery can continue and do better heading into next year," said Josh Feinman, global chief economist for DB Advisors, Deutsche Bank's institutional asset-management business.

With economic estimates for the U.S. and the rest of the world falling, "the bar has been lowered and the economy can at least match, if not exceed, those admittedly lower expectations."

In addition, Mr. Feinman said central banks remain accommodative and U.S. companies have shown their ability to maintain their fat profit margins.

Limiting the gains were consumer discretionary stocks. McDonald's had the biggest fall among Dow components, dropping 1.6% after the fast-food giant reported declining sales across all three of its global regions, disappointing expectations.

A rise in Spain's government borrowing costs also kept investors cautious. On Wednesday, the yield on the 10-year government bond ticked briefly above the 7% level that many investors consider unsustainable, trading recently at 6.916%, according to Tradeweb. Spain's IBEX-35 pared earlier losses to finish down 0.8%.

Asian markets closed broadly higher, tracking previous gains in the U.S. and Europe. Japan's Nikkei Stock Average rose 0.9% to a one-month high and China's Shanghai Composite gained 0.2% to rise for the fourth straight day.

In U.S. economic data, the productivity of U.S. workers increased at a 1.6% annual rate during the quarter, better than expectations for a 1.3% rise. However, labor costs rose 1.7%, much higher than estimates of a 0.6% increase.

Crude-oil futures added 0.3% to about $93.35 a barrel, while gold futures edged up 0.2% to $1,612.90 an ounce. The U.S. dollar moved higher against the euro but slipped against the yen. Treasurys fell, pushing the yield on the benchmark 10-year Treasury note higher to 1.642%.

Shares of Walt Disney rose 1% after the Dow component reported fiscal third-quarter earnings that exceeded analysts' estimates but revenue that fell short of expectations.

Priceline.com dropped 17% after the online travel agent reported second-quarter earnings that beat estimates but provided a third-quarter outlook that was well below current projections, citing intensifying economic uncertainty across Europe, Asia and the U.S.

Dean Foods led S&P 500 components, rising 40% after the dairy company reported better-than-expected second-quarter earnings, provided an upbeat outlook for the third quarter and for the year and said its WhiteWave Foods subsidiary filed for an initial public offering.

MEMC Electronic Materials shot up 9.2% after the silicon-wafer technologies company reported a second-quarter adjusted profit, compared with expectations of a slight loss, and revenue that was well above forecasts.

Carlyle Group fell 2.2% after the private-equity firm disappointed expectations and saw revenues tumble in the second quarter. Carlyle also saw its assets under management slip from the previous quarter.

Bloomin' Brands, operator of Outback Steakhouse, surged 13% in its public debut after lowering its offering price and the number of shares it was selling.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

(END) Dow Jones Newswires

August 08, 2012 15:52 ET (19:52 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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