u.s. stocks rise

U.S. Stocks Rise on Oil-Price Drop, Retail Sales, Tyco Earnings
May 4 (Bloomberg) --

U.S. stocks rose and the Dow Jones Industrial Average set a six-year high after oil prices dropped, retailers posted the biggest monthly sales increase since 2004 and Tyco International Ltd.'s earnings exceeded estimates.

General Electric Co. got a lift from the results at Tyco, the world's biggest seller of fire and security systems. Starbucks Corp. and Whole Foods Market Inc. gained after reporting profits that exceeded Wall Street projections.

``A lot of the economic signs remain pretty good and we've been pleased with earnings,'' said Warren Simpson, who helps manage $2.6 billion at Stephens Capital Management in Little Rock, Arkansas. ``We remain pretty bullish.''

Lingering inflation concerns held back the advance as a government report showed labor costs last quarter jumped twice as much as forecast. The Standard & Poor's 500 Index failed to exceed its highest level since 2001, reached earlier this week.

The Dow average gained 38.58, or 0.3 percent, to 11,438.86, the highest since January 2000. The S&P 500 added 4.40, or 0.3 percent, to 1312.25. The Nasdaq Composite Index rallied 19.93, or 0.9 percent, to 2323.90.

Two stocks rose for every one that fell on the New York Stock Exchange. Some 1.72 billion shares changed hands on the Big Board, 6.6 percent more than the three-month average.

A Labor Department report tomorrow may confirm the best six months of hiring since 2000 and reinforce speculation the Federal Reserve may need to keep lifting interest rates.

Exceeding Forecasts

Better-than-expected quarterly earnings results from companies including Google Inc. and United Technologies Corp. have spurred a rally this year. The Dow average is within 300 points of a record reached January 2000, while the S&P 500 posted advances for each of the first four months of 2006.

About 68 percent of the 422 S&P 500 companies that reported first-quarter earnings beat analysts' estimates, more than the 57 percent average since 1992, data from Thomson Financial show.

Still, record oil prices and signs of buoyant economic growth have reinforced expectations the central bank may boost borrowing costs to restrain inflation, limiting gains in equities. The S&P 500 has added 1.2 percent since Alcoa Inc.'s results unofficially kicked off earnings season on April 10.

``It's been a tug of war from day to day,'' said Alfred Kugel, who helps oversee $17 billion as chief investment strategist at Atlantic Trust/Stein Roe in Chicago. ``Oil prices have gone up more than people thought they would at the start of the year and certainly interest rates have. But on the other side, the economy has been stronger and corporate earnings have been even better.''

Oil Prices

Oil prices today dropped below $70 for the first time since April 17 after a report yesterday showed U.S. gasoline stockpiles rose for the first time in nine weeks. Crude for June delivery slid 3.2 percent to $69.94 in New York. Futures touched $75.35 last month, the highest since trading began in 1983.

Retailers advanced on the drop in oil prices and a report that showed April sales climbed as warm weather and the Easter holiday spurred demand for spring clothing. The International Council of Shopping Centers said April sales rose 6.6 percent, the most since March 2004.

An S&P 500 gauge of food and household-products retailers that includes Wal-Mart Stores Inc. climbed 0.5 percent, while a measure of other retailers increased 0.4 percent.

Wal-Mart

Wal-Mart lost 29 cents to $46.40 after climbing as much as 0.6 percent to $46.98. The world's largest retailer said sales this month at stores open at least a year may climb 2 percent to 4 percent. In April, they rose 6.8 percent, the biggest gain in almost three years.

Tyco gained 98 cents to $27.92. Second-quarter profit excluding some items was 45 cents a share, beating Chief Executive Officer Ed Breen's forecast of 40 cents to 42 cents as costs declined.

Industrial shares gained 1 percent for the biggest jump among 10 groups in the S&P 500. GE, the world's biggest maker of power-generation equipment, added 40 cents to $34.80.

Starbucks added $1.44 to $38.79. The world's largest coffee shop chain boosted its profit forecast for the fiscal year to as much as 72 cents, from an earlier estimate of up to 70 cents. Fiscal second-quarter profit rose to 16 cents a share, 2 cents more than analysts' estimates, after it added a line of green tea drinks and opened more than 400 stores.

Whole Foods

Whole Foods jumped $8.27, or 13 percent, to $70.42 for the best performance in the S&P 500. Profit climbed to 36 cents a share on new store openings. The company also lifted its projection for fiscal 2006 same-store sales to 10 percent to 12 percent, from an earlier range of 8 percent to 11 percent.

Labor costs increased in the first quarter at a 2.5 percent annual pace, more than double the 1.2 percent rate economists expected. Productivity, a measure of how much an employee produces for every hour worked, rose at an annual rate of 3.2 percent, following a 0.3 percent decline in the previous three months. Economists estimated an increase of 3 percent.

Employers added 200,000 jobs last month, according to economists surveyed by Bloomberg. Today, the Labor Department said first-time unemployment claims rose to 322,000 last week, from 317,000 the week before.

`Increasingly Concerned'

``I'm becoming increasingly concerned that the economy may be getting too strong for the Fed's liking,'' said Joseph Quinlan, who helps manage $457 billion as chief market strategist at Bank of America Capital Management in New York. ``If you get a blowout number on the jobs data tomorrow, we increase the odds of the Fed not being done in May.''

Interest-rate futures show traders are certain the Fed will increase its benchmark rate to 5 percent from 4.75 percent, on May 10. There is a 48 percent chance it will reach 5.25 percent by June, up from 34 percent two days ago. The Fed has raised its target rate for overnight lending between banks 15 times since June 2004.

The slide in oil prices pushed a gauge of energy shares down 0.6 percent for the only decline among 10 industry groups in the S&P 500. Exxon Mobil Corp., the world's largest publicly traded oil company, lost 46 cents to $63.31.

Electronic Arts Inc. fell $5.95, or 11 percent, to $48.55 for the steepest loss in the S&P 500. For the fiscal year ending in March 2007, the world's top video-game maker forecast a loss of 15 cents a share to a profit of 15 cents. Analysts expect profit of $1.07. Delays in the release of new consoles roiled the shipping schedule for new games.

Spiders

S&P 500 shares, called Spiders, added 47 cents to $131.36. Nasdaq-100 tracking shares, known by their QQQQ symbol, gained 34 cents to $41.83.

S&P 500 futures expiring in June gained 4.70 to 1317 on the Chicago Mercantile Exchange. Nasdaq-100 Index futures rose 16.25 to 1709.75.

The Russell 2000 Index, a benchmark for companies with a median market value of $662 million, gained 0.9 percent to 774.72. The Dow Jones Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, climbed 54.34, or 0.4 percent, to 13,288.63. Based on the changes in the Wilshire, the value of stocks increased by $67.9 billion.