A strong sales report from McDonald's Corp fast-food restaurants boosted US blue-chip stocks on Friday, but the tech-heavy NASDAQ suffered its sixth straight losing session after a warning about gross profit margins from chip designer Nvidia Corp.
Treasuries were mixed, with many issues down slightly as dealers sold some of the government paper accumulated in this week's US$60 billion Treasury refunding.
PHOTO: AP
The dollar rose against major currencies, while gold rallied as traders acted on computer buy signals.
Oil prices slipped back from their highest levels since the March invasion of Iraq.
Stock investors were in a buying mood after watching the recently battered bond market weather this week's Treasury refunding. Wall Street had worried that rising Treasury yields could hurt economic growth and corporate profits by lifting interest rates on mortgages and loans.
Economic data also helped by showing a rise in productivity and a drop in weekly jobless claims.
"Overall sentiment is positive," said Tim Heekin, director of trading at Thomas Weisel Partners. "People were concerned last week about the bond market action, but overall, they're getting comfortable with the bond market sell-off as it indicates the economy is starting to recover."
The Dow Jones Industrial Average rose 64.64 points, or 0.71 percent, to close at 9,191.09. The broader Standard & Poor's 500 Index rose 3.47 points, or 0.36 percent, to 977.59, based on the latest available figures.
But the technology-laced NASDAQ Composite Index ended off 8.15 points, or 0.49 percent, at 1,644.03, the day after graphics chip designer Nvidia Corp said gross margins could decline in the third quarter.
Burgers and chips
Nvidia shares fell US$3.80 or 19.69 percent, to US$15.50 and were among the NASDAQ's most active issues. Other chipmakers were also pressured. Intel Corp, the world's top semiconductor maker, fell 41 cents or 1.71 percent to US$23.58.
The Philadelphia Stock Exchange semiconductor index sank 3.11 percent.
On the NASDAQ, decliners edged out advancers by about 16 to 15.
But advancers outpaced decliners on the Big Board by about 20 to 12 in moderate trade.
McDonald's shares jumped after it said sales at hamburger restaurants open more than one year rose 4.2 percent in July for the third straight month. Its shares rose US$1.83 or 8.3 percent, to US$23.89 and led the Dow's percentage gains.
After absorbing US$60 billion in Treasuries this week, bond dealers unloaded some inventory, causing the market to burp in late trading and finish flat to slightly lower. Still, Treasuries looked set to make their first weekly gain after two straight months of losses.
"Given the amount of paper the Street had to swallow this week, it's done well not to regurgitate any more," said one trader at a US primary dealer.
The 10-year note fell 3/32 in price to 99 and 25/32, its yield down to 4.28 percent from both the 4.37 percent at Thursday's auction and last week's close of 4.39 percent.
Two-year notes edged 1/32 higher in price to close at 99 and 20/32, nudging the yield down to 1.70 percent from 1.71 percent. The 30-year bond shed 10/32 to a price of 101 and 31/32, for a yield of 5.24 percent from 5.22 percent late Thursday.
The dollar rose on position squaring ahead of key economic data and the Federal Reserve's meeting next week.
The euro was at US$1.1304 against the dollar late in New York, down 0.65 percent on the day. Against the Japanese currency, the dollar was nearly unchanged at ?119.02.
The tone for the dollar next week is weakness against the yen, ABN Amro said in a research note, ahead of a huge U.S. Treasury coupon payment of about US$24 billion on Aug. 15, with about US$51 billion in Treasuries maturing the same day.
Oil slips
On the New York Mercantile Exchange, US benchmark crude oil futures for September delivery settled US$0.21 lower at US$32.18 a barrel. Earlier, NYMEX September crude hit US$32.85 per barrel, its highest since March 18, two days before the US-led invasion of Iraq.
In London, international benchmark September Brent crude on the International Petroleum Exchange ended down US$0.26 at US$29.99 a barrel.
Brent came close to its post-invasion high.
Energy analyst Simon-Games Thomas said tight supplies in the United States heading into winter demand season and the wait for Iraqi exports to return should keep prices simmering for the rest of the year.
December gold rose US$3.80, or 1.1 percent to settle at US$357.90 an ounce on the Comex, trading from US$353.40 to US$359.00. It was the highest level in nine days as commodity trading advisors acted on computer buy signals and a move upward in gold shares sucked investment capital into the sector, dealers said.
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