US stocks gain, dollar drops

By Jan Paschal

NEW YORK: US stocks rose on Friday after stellar earnings from software leader Microsoft Corp and a broker's bullish call on fast-food giant McDonald's Corp, while bonds fell after a rise in July consumer sentiment. 

For bonds, it was the end of a week that included the worst one-day sell-off in five years. 

The University of Michigan preliminary consumer sentiment index, a widely followed measure of consumers' mood, rose to 90.3 in July from a final reading of 89.7 in June. The July reading was just above a forecast for a reading of 90.0. 

The dollar lost ground against the euro and the yen after the Michigan survey's consumer expectations index failed to give investors a hoped-for stronger confirmation of an economic recovery. 

The Michigan expectations index – which measures attitudes about the 12 months ahead – slipped to 82.7 in July from 86.4 in June. That was in strong contrast to the survey's current conditions index, which tracks consumers' views about their present financial situation. The preliminary current conditions index jumped to 102.8 in July from 94.7 in June. 

“Expectations are getting a little overblown,” said Hugh Walsh, vice president of foreign exchange at Fortis USA in New York. 

“The market was expecting the Michigan survey to surprise on the upside,” Walsh said. 

“When it didn't, and came just slightly higher than expectations, the euro started rallying a bit.” 

On Wall Street, the Dow jumped in mid-afternoon after the federal government reported a budget surplus in June of US$21.16bil, following a budget deficit of US$90.03bil in May. 

The blue-chip Dow Jones industrial average climbed 137.33 points, or 1.52%, to 9,188.15. The broad Standard & Poor’s 500 gained 11.59 points, or 1.18%, to 993.32. The tech-laced Nasdaq Composite was up 10.48 points, or 0.62%, to close at 1,708.50, based on the latest available figures. 

For the week, the Dow gained 0.75%. Despite the late-day rally, the S&P 500 shed 0.48% and the Nasdaq lost 1.47% for the week. 

In New York, crude oil futures soared 1.7%, rising for the second straight day on speculation that next week’s inventory data would show another decline. 

Supply disruptions after Hurricane Claudette’s pounding of the Gulf of Mexico this week will probably cause the drawdown, or drop, in crude stockpiles, traders said. 

Stock investors took note of Microsoft Corp’s 26% jump in net profit, which was reported after Thursday’s closing bell. 

Microsoft, among Nasdaq’s most actives, edged up 20 cents to close Friday’s session at US$26.89. The stock, also among the 30 in the Dow average, earlier jumped as much as 2%. 

McDonald’s Corp advanced 90 cents, or 4.4%, to US$21.39 and led the Dow higher. Bear Stearns upgraded the world’s largest fast-food chain, known for its Golden Arches and hamburgers, to “outperform” from “peer perform.” 

In the US Treasury market, the benchmark 10-year note slid 20/32 to a price of 96-31/32, while its yield rose to 4% from 3.98% at Thursday’s close. The two-year note slipped 3/32 to 99-9/32, while its yield edged up to 1.49% from 1.48% the previous day. 

The 30-year bond lost 21/32 to 106-19/32, while its yield went up to 4.94 % from 4.89% at Thursday’s close. 

In late US currency trading, the euro rose to US$1.1275 from US$1.205 the previous day in New York. The dollar dropped to 118.40 yen from 118.76 late Thursday. 

On the New York Mercantile Exchange, crude oil for August delivery rose 55 cents, or 1.7%, to settle at US$31.96 a barrel, after hitting a session high of US$32. That contract is set to expire next week. September crude gained 31 cents or 1% to end at US$31.03. 

In London, the blue-chip FTSE 100 index added 16.6 points or 0.41% to finish at 4,073.2. 

In Tokyo, the benchmark Nikkei average broke a three-day streak of losses. The Nikkei rose 28.87 points or 0.30% to end Friday’s session at 9,527.73. – Reuters  

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