US Stocks Climb, Boosted By Consumer Confidence

By Kristina Peterson


NEW YORK (MarketWatch) -- U.S. stocks erased early losses on Tuesday as a better-than-expected reading of consumer confidence provided some encouragement to investors bracing for slower economic growth.

The Dow Jones Industrial Average rose 43 points, reclaiming the 10000 level. Stocks wiped out an early decline, following after consumer confidence increased more than expected in August, raising expectations about future economic activity.

"Housing is continuing to be really weak. The jobs market is the thing the market's most concerned about," said Bill Vaughn, portfolio manager at Evercore Wealth Management, who said the economy still seems to be haltingly improving in a "stair-step" fashion.

"That's a normal pattern whether it's the macro-economy or the market," he said.

Heading into the final day of August, key indexes are on track for a month of steep losses. The Dow has shed nearly 4.1% this month, its first down August in five years. This month is on track to be the blue-chip measure's worst August since 2001.

Small-capitalization stocks have taken an even bigger hit this month. The Russell 2000 index of small-cap stocks is on pace to post its worst August performance in 12 years.

The market weathered mixed housing and manufacturing data earlier in the morning, helping benchmark indexes stay above key support levels. The Standard & Poor's 500-share index rose 0.3% to 1052, after bouncing off the key 1040 level. The Nasdaq Composite gained 0.2% to 2123.

The Dow was recently up 0.3% to 10045, boosted by a 1.9% rise in Caterpillar.

However, technology components weakened after technology researcher Gartner cut its 2010 projection for worldwide personal-computer shipments, saying the second half won't be a strong as it previously expected. Intel fell 0.7%, while Cisco Systems shed 0.2%.

Continuing the buzz around recent deal activity, luxury-fashion retailer Saks rallied 23%. Saks' climb was fueled by speculation that a private-equity consortium is preparing a cash bid of $1.7 billion, or $11 a share, for the retailer, according to the Daily Mail newspaper, citing unidentified sources. A Saks spokesman couldn't immediately be reached for comment.

Food-processing company H.J. Heinz rose 1% after projecting first-quarter earnings above analysts' recent views as the food-processing company said results again were driven by emerging markets.

Biotech agribusiness company Monsanto dropped 4.6% after predicting its fiscal-year earnings will come in at the low end of its prior view.

Investors fretting over the pace of the economic recovery have been closely focused on the Federal Reserve's assessment of the economy. In the early afternoon, the central bank will release the minutes from the Aug. 10 meeting of the Federal Open Market Committee.

The U.S. dollar weakened against both the euro and the yen. The euro was trading recently at $1.2724, up from $1.2665 late Monday in New York. Demand for Treasurys was mixed, with the two-year note flat and the 10-year note up to push its yield down to 2.51%. Crude-oil prices edged down, while gold futures advanced.