US stocks edge up, shaking off weak economic news


NEW YORK: Signs of a sluggish economic recovery sent government bond yields to their lowest level in a year Thursday. But strong earnings and a plea to push Microsoft's CEO aside helped push stocks higher.

Microsoft Corp. rose 2 percent after well-known hedge-fund manager David Einhorn called for the tech giant's board to replace CEO Steve Ballmer. Einhorn was quoted as saying at a conference late Wednesday that Ballmer's management was keeping the company's stock down.

Stocks reversed early losses and bond yields remained near their lowest level in a year after two reports suggested that the U.S. jobs market is recovering more slowly than economists anticipated.

The Dow Jones industrial average rose 8.10 points to close at 12,402.76. It was the second day of gains for the Dow after three days of losses driven by new concerns about Greece's debt crisis.

Tiffany & Co. rose 8 percent, the most of any stock in the S&P 500 index, after the company said its income rose 25 percent on higher revenue across all regions. The results easily beat analysts' expectations. The jewelry maker also raised its forecast for the year above current Wall Street estimates.

The Standard & Poor's 500 index rose 5.22, or 0.4 percent, to 1,325.69. The Nasdaq composite rose 21.54, or 0.8 percent, to 2,782.92. More than two shares rose for every one that fell on the New York Stock Exchange. Trading volume was 3.5 billion shares.

The Nasdaq composite rose 21.54, or 0.8 percent, to 2,782.92.

In a revised look at economic growth, the government reported that the U.S. economy grew 1.8 percent in the January-March quarter. Economists expected an upward revision to 2.2 percent. Gasoline prices that reached $4 a gallon and sharp cutbacks in government spending hindered growth.

More people applied for unemployment benefits last week, the first increase in three weeks. The number of people seeking benefits rose by 10,000 to 424,000. Analysts expected a drop.

Employers stepped up hiring this spring, but some economists worry that rising applications for unemployment benefits suggest that the hiring is uneven. The next look at the job market comes June 1, when payroll processor ADP provides its monthly employment report.

The weaker than expected economic news drew investors into government bonds, sending the yield on the 10-year Treasury note as low as 3.06 percent, its lowest level this year. It was trading at 3.15 percent shortly before the economic reports came out. Bond yields fall when their prices rise.

"People are nervous about what's happening in Europe, nervous about whether or not the economic recovery has enough wind left in its sails," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds.

Concerns about the European debt crisis have caused the market to wobble in recent weeks as the likelihood seemed to increase that Greece would need to renegotiate its debts, even after receiving a package of emergency loans last year. Greece's debt troubles sent global markets reeling last spring as investors shunned the debt of other European nations. Investors are fearful that scenario might repeat itself.

Stocks have been falling throughout May, erasing nearly all of the gains made in April on stronger corporate earnings reports. The S&P 500 has lost 3 percent this month after reaching a 2011 high of 1,363 on April 29. It's still up 5.4 percent for the year.

Computer Sciences Corp. fell 13 percent, the most in the S&P 500, after the government contractor reported disappointing results and a weak earnings forecast late Wednesday. CSC also announced that its audit committee has started an investigation into accounting issues, some of which are being investigated by the Securities and Exchange Commission.

AP reported from London earlier that stock markets and the euro fell Thursday on a report that Greece may not get the next installment of its international rescue loans. Weak U.S. economic data further weighed on sentiment.

Jean-Claude Juncker, the chairman of the Eurogroup, said in Luxembourg that the International Monetary Fund may have to hold back the next tranche of its funding for Greece, according to an analyst.

The reason is that the IMF's loans are contingent on Greece showing what its state financing will be over the next 12 months.

Until recently, that was meant to include raising cash on bond markets next year, a move the Greek government has admitted is no longer possible as its market borrowing rates remain too high.

An IMF and EU delegation is now in Athens reviewing Greece's finances, and a decision on the IMF's next aid installment will be made in June.

David Mackie, analyst at JP Morgan in London, said Juncker may be trying to put pressure on Greece to reach a cross-party agreement on economic reforms.

He said, however, that European governments would be ready to step in with extra aid.

"We do not believe that Greece will be allowed to default in the coming weeks due to a failure to disburse the funds under the current program," Mackie said.

If the IMF did withhold its aid, Europe's bailout fund could be tapped to make up for the difference.

Though Juncker's comments were not clear, they pushed stocks and the euro lower.

The euro slumped from $1.4200 before the comments to trade around $1.4090 by late afternoon in Europe.

Germany's DAX closed down 0.8 percent at 7,114.09. CAC-40 in France shed 0.3 percent to 3,917.22. The FTSE 100 index of leading British shares bucked the trend, trading 0.2 percent higher at 5,880.99.

CAC-40 in France shed 0.3 percent to 3,917.22.

"The latest U.S. data definitely fit into a growing pattern of softer than expected reports," said Alan Ruskin, an analyst at Deutsche Bank.

Stocks have been weighed down by concerns about the pace of the U.S. recovery as well as worries over Europe's debt crisis, in particular whether Greece will end up having to restructure its mountain of debts.

Earlier Thursday in Asia, stocks enjoyed a strong day, with Japan's Nikkei 225 stock average boosted by the news that camera maker Canon was to spend as much as 50 billion yen ($183 million) buying back up to 1.2 percent of its shares. The Nikkei closed 1.5 percent higher at 9,562.05, with Canon up 5.8 percent. South Korea's Kospi leaped 2.8 percent to end at 2,091.91. Australia's S&P/ASX 200 rose 1.6 percent to finish at 4,660.20. Hong Kong's Hang Seng ended 0.7 percent higher at 22,900.79 but mainland Chinese shares slid amid concerns that growth may slow in the latter half of the year. Shanghai's Composite Index dipped 0.2 percent to close at 2,736.53 while the smaller Shenzhen Composite Index lost 1 percent to end at 1,123.15. - AP

The Nikkei closed 1.5 percent higher at 9,562.05, with Canon up 5.8 percent.

South Korea's Kospi leaped 2.8 percent to end at 2,091.91.

Australia's S&P/ASX 200 rose 1.6 percent to finish at 4,660.20.

Hong Kong's Hang Seng ended 0.7 percent higher at 22,900.79 but mainland Chinese shares slid amid concerns that growth may slow in the latter half of the year.

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