US stocks rise

Wall Street struggled but ultimately closed higher today as a bounce in technology stocks and sharply lower oil prices helped investors brush off concerns about sluggish consumer spending.

Retailers' lacklustre holiday sales reports initially sent major stock indexes significantly lower. Stocks climbed back after a drop in crude prices to below $56 a barrel raised hopes that cheaper gasoline might be on the way.

A broad advance from chip stocks supported the market. Leading the way was Intel, which surged to its highest level in two weeks after Banc of America Securities said it expected fourth-quarter results to come in higher than expected.

The market's performance today showed that investors remain uneasy about any economic data, especially after minutes from the Federal Reserve's last meeting indicated policymakers were in no hurry to cut interest rates.

Mixed data today included disappointing housing and service-sector reports.

"People are thinking now that energy prices are coming down, and that gives a chance for technology and other sectors to perform better," said Scott Fullman, director of investment strategy for Hapoalim Securities USA. "The broader picture is that the economy continues to show signs of slowing, and that will continue through the first quarter."

The Dow Jones industrial average rose 6.17, or 0.05%, to 12,480.69. The index had dropped by about 50 points earlier in the session.

Broader stock indicators were higher. The Standard & Poor's 500 index edged up 1.71, or 0.12%, to 1,418.34, and the tech-dominated Nasdaq composite index added 30.27, or 1.25%, to close on 2,453.43.

Bonds moved higher, with the yield on the benchmark 10-year Treasury note falling to 4.61% from 4.66% on Wednesday. Yields have moved decidedly lower during the past few week as it has became apparent there is no impending interest rate cut from the Fed.

Also sending bond yields lower was the Institute of Supply Management's services sector index for December, which showed growth slowed from November.

Other data released today included the Commerce Department's report that US factory orders bounced back during November from a big drop. However, the rebound was still smaller than expected and driven partly by soaring military aircraft demand.

Meanwhile, the Labour Department said the number of laid-off workers filing unemployment claims reached its highest level since late November. The National Association of Realtors' pending home sales index for November - a measure of future demand for homes - slipped 0.5% to 107.0 from a revised 107.5 in October.

"What you're seeing is just a tug of war between concerns the housing market is still weighing us down, and the wheelbarrows full of liquidity that want to go somewhere," said Kevin Gaughan, portfolio manager and equity strategist at Strong Financial Corp.

But the drop in oil prices continued to be the biggest influence on the markets. Oil prices slid for a second day after the government reported inventories of petrol, heating oil and diesel fuel rose more than analysts expected during the last week of 2006.

A barrel of light sweet crude fell $2.73 to $55.59 on the New York Mercantile Exchange, near its low of the session.

Exxon Mobil was among the biggest decliners on the Dow Jones industrials, falling $1.39 to $72.72. Chevron fell 69 cents to $70.28, and British Petroleum PLC dropped 87 cents to $65.11.

However, lower petrol prices were seen as a positive for retailers, many of which suffered during the holiday season, and some of whom issued profit warnings today.

Gap warned that fourth-quarter results would come in below expectations, and its shares rose 13 cents to $19.44. Target, the US's second-largest discount retailer, rose 41 cents to $57.59 despite missing sales estimates.

Federated Department Stores fell 20 cents to $37.31. Limited Brands was one of the few decliners in the sector after it reported lower store traffic caused its same-store sales to miss expectations. Shares fell $2.23, or 7.5%, to $27.35.

Intel, the second biggest advancer in the S&P 500, rose 82 cents, or 4%, to $21.17. Banc of America Securities raised the company's fourth-quarter earnings estimate, saying the chip maker would probably gain market share. Rival Advanced Micro Devices rose 27 cents to $19.79.

Advancing issues outnumbered decliners by a 3 to 2 basis on the New York Stock Exchange, where volume totalled 1.7 billion shares.

The Russell 2000 index of smaller companies was up 2.53, or 0.32%, at 789.95.