Stocks turn higher following durable goods report

Wednesday August 27, 11:49 am ET By Tim Paradis, AP Business Writer
Stocks turn higher after durable goods orders rise more than expected; retailers advance
NEW YORK (AP) -- Stocks rose moderately Wednesday after the government reported a larger-than-expected increase in orders for big-ticket manufactured goods, offsetting some unease about a rise in oil prices.
The Commerce Department said orders for durable goods jumped 1.3 percent in July compared with the previous month, led by a big gain in demand for commercial aircraft. That was well above the 0.1 increase expected by economists surveyed by Thomson/IFR.
Durable goods, which also include cars, appliances and machinery, are under scrutiny not only because they reflect business spending, but because they are also an indicator of consumer confidence. The July increase equaled a 1.3 percent rise in June; both months produced the strongest gains since a 4.1 percent leap back in December.
Mark Coffelt, portfolio manager at Empiric Funds in Austin, Texas, cautioned against reading too much into the durable goods report and said economic readings will likely continue to come in mixed. He predicts that volatility also will likely continue as investors thumb through a list of concerns ranging from the financial sector, to housing to energy costs.
"I think what we see is a lot of confusion right now. I'm not sure investors really know what to do. You've got oil jumping all over the place," he said.
Light, sweet crude rose $1.53 a barrel to $117.80 on the New York Mercantile Exchange on worries that Tropical Storm Gustav might hit Gulf of Mexico installations
In late morning trading, the Dow Jones industrial average rose 46.57, or 0.41 percent, to 11,459.44.
Broader stock indicators also rose. The Standard & Poor's 500 index advanced 5.16, 0.41 percent, to 8,319.06, and the Nasdaq composite index rose 9.76, or 0.41 percent, to 2,371.73.
Light trading volume ahead of the long Labor Day weekend is also likely to exacerbate the market's moves.
Stocks ended mixed Tuesday as what was then Hurricane Gustav sent oil prices higher and offset a better-than-expected reading on consumer confidence.
Bond prices fell slightly Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.79 percent from 3.78 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.
Rising energy prices initially curtailed the market's overall advance but investors eventually appeared to set aside some of their concerns. But the rise in oil prices still weighed on companies such as airlines, which have been hit hard by rising costs for jet fuel. It also buoyed names in the energy sector.
Northwest Airlines Corp. fell 99 cents, or 10 percent, to $8.56, while U.S. Airways Group fell $1.27, or 11 percent, to $9.88.
Oil refiner Tesoro Corp. rose $1.79, or 11 percent, to $18.36, while Valero Energy Corp. added $1.87, or 5.6 percent, to $35.47.
Several retailers advanced after signaling that business is stronger than some investors might have expected, offering investors some reassurance about consumer spending and in turn, the health of the economy.
Borders Group Inc. jumped $1.10, or 21 percent, to $6.46 after the bookseller reported better-than-expected second-quarter results and slashed debt.
Clothing retailer Talbots Inc. rose $2.90, or 29 percent, to $12.90 after the company raised its forecast for 2008 per-share earnings.
Chico's FAS Inc. rose 48 cents, or 9.4 percent, to $5.56 after the women's apparel retailer's fiscal second-quarter profit fell sharply but beat Wall Street's expectations.
Advancing issues outnumbered decliners by about 5 to 2 on the New York Stock Exchange, where volume came to a light 243.3 million shares.
The Russell 2000 index of smaller companies rose 5.78, or 0.80 percent, to 729.29.
Overseas, Japan's Nikkei stock average fell 0.20 percent. In afternoon trading, Britain's FTSE 100 rose 0.49 percent, Germany's DAX index fell 0.42 percent, and France's CAC-40 slipped 0.08 percent.
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