US stocks on the rise

Stocks turned higher in New York today, regaining most of the ground they lost in the previous session following a bright first-quarter outlook from semiconductor maker Advanced Micro Devices and upgrades of oil services stocks.

AMD’s forecast heartened tech investors who were spooked on Wednesday by disappointing earnings forecasts from Intel and Yahoo. Since semiconductors form the guts of much high-tech equipment, AMD is seen as a bellwether and its outlook was enough to make investors overlook a dimmer forecast from Apple.

“People are happy that the Intel bad news didn’t translate to other semiconductor stocks,” said Robert Streed, portfolio manager of Northern Trust Select Equity Fund in Chicago.

Investors also cheered oil services company Schlumberger’s announcement of a 2-for-1 stock split and Morgan Stanley’s upgrades of oil services businesses, including Halliburton and Baker Hughes.

The Dow Jones industrial average added 25.85, or 0.24%, to close at 10,880.71.

Broader stock indicators also closed higher. The Standard & Poor’s 500 index rose 7.11, or 0.56%, to 1,285.04, and the Nasdaq composite index gained 22.17, or 0.97%, to close at 2,301.81.

Bonds fell, with the yield on the 10-year Treasury note rising to 4.37% from 4.34% late on Wednesday. The US dollar was mixed against other major currencies in European trading. Gold prices were higher.

Crude oil futures rose. A barrel of light crude was quoted at 66.83, up 1.10, in trading on the New York Mercantile Exchange.

Earnings season is off to a nervous start, with investors reacting strongly to earnings or guidance that fall short of analysts’ estimates.

“The market has been weak in the last few days on a number of worries,” said Joseph Lisanti, editor of Standard & Poor’s weekly newsletter, The Outlook. “One of them has been earnings. We think that despite a couple of warnings and misses, earnings in general for the fourth quarter of 2005 are going to look pretty decent.”

The day’s economic news was mixed. Construction of new single-family homes surged to an all-time high in 2005 but construction activity fell sharply in December, sending a signal that the US’s long housing boom could be cooling off.

Separately, the Labour Department said the number of Americans filing for unemployment benefits fell to 271,000 last week, an unexpectedly large drop of 36,000 from the previous week, indicating strength in job markets.

Investors are watching employment numbers closely for any hint that wages could rise, which they fear would be inflationary.

Stocks were unmoved by news that the Arab television news station Al-Jazeera aired an audiotape from Osama bin Laden, saying al-Qaida was making preparations for attacks in the US but offering a truce to rebuild Iraq and Afghanistan.

In company news, AMD rose 2.98 to 37.13 after it reported a fourth-quarter profit on a 45% jump in sales, turning around a loss from the prior year and handily beating Wall Street expectations. The company also forecast a solid first quarter, saying sales could soar as much as 70% over last year.

Ebay rose 2.33, or 5.2%, to 46.77 after Friedman Billings Ramsey upgraded it to “outperform” from “market perform,” saying its outlook was overly cautious.

Schlumberger, one of the world’s largest oil field services companies, rose 5.76, or 5.3%, to 114.87 after it declared a 2-for-1 stock split and said it was increasing its quarterly dividend to 25 cents per share, up from 21 cents a share.

Halliburton rose 2.35 to 71.75; Baker Hughes rose 3.13 to 72.47 and Noble Corp rose 4.35 to 82.35 after Morgan Stanley upgraded the stocks to “Equal Weight” from “Underweight”.

While Apple reported a record-breaking first quarter, its stock dropped 3.46 to 79.04 after its second-quarter outlook fell short of analysts’ expectations.

The Walt Disney is in serious talks to buy Pixar Animation Studios, the maker of the hit movies Toy Story and Finding Nemo among others, following months of exploring how to continue their profitable film distribution partnership, The Wall Street Journal reported today. Disney rose 1.04 to 26.24; Pixar rose 1.61 to 58.87.

The Russell 2000 index of smaller companies rose 11.16, or 1.59%, to 714.94.

Advancing issues led decliners by more than 2 to 1 on the New York Stock Exchange where volume totalled 1.70 billion shares, up from 1.67 billion at the same time Wednesday.