By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stock indexes rose on Tuesday,
with technology pacing the gains, after investor Carl Icahn touted
his large position in Apple Inc.
Apple (AAPL) jumped 4.8% after Icahn revealed his "large
position" in the stock and amid reports that the
consumer-technology company will unveil a new iPhone on Sept.
10.
"When you have a market leader, a still widely held stock being
referenced by one of the most widely known and respected investors,
Carl Icahn, people do want to play follow the leader," said Robert
Pavlik, chief market strategist at Banyan Partners.
After an 84-point rise and 77-point slide, the Dow Jones
Industrial Average (DJI) ended at 15,451.01, up 31.33 points, or
0.2%. Hewlett-Packard Co. (HPQ) paced blue-chip gains, up 2.1%,
after being placed on Citigroup Inc.'s focus list.
The S&P 500 index (SPX) rose 4.69 points, or 0.3%, to
1,694.16, with technology and financials the best performing of its
10 major sectors. Rafferty Capital Markets analyst Dick Bove told
CNBC on Tuesday that the banking sector is on track for record
profits this year.
Shares of US Airways Group Inc. (LCC) declined 13% after the
U.S. Justice Department filed a lawsuit challenging the airline's
merger with AMR Corp. (AAMRQ), the parent of American Airlines.
J.C. Penney Co. (JCP) retreated 3.7% after activist investor
Bill Ackman resigned from the retailer's board, ending efforts to
oust CEO Mike Ullman.
Yum Brands Inc. (YUM) declined 2% a day after the operator of
fast-food chains KFC and Taco Bell said sales in China fell last
month.
Eli Lilly & Co. (LLY) rallied 2.6% after the drug
manufacturer said its potential treatment for lung cancer yielded
positive initial results in a late-stage study.
The Nasdaq Composite (RIXF) gained 14.49 points, or 0.4%, to
3,684.44.
For every two shares rising, roughly three fell on the New York
Stock Exchange, where 618 million shares traded.
Composite volume topped 3 billion.
Stocks rose to session highs after Dennis Lockhart, president of
the Atlanta Fed Bank, on Tuesday afternoon said the economy's
uneven performance likely means the Fed won't commit to a "full
phase-out" of its $85 billion in monthly bond buys.
"From an earnings standpoint, we're strong enough to support a
taper in September. And the jobs picture is improving, so I've been
in the camp that it's coming, regardless whether it's September or
December," said Nick Raich, CEO at the Earnings Scout.
The yield on the 10-year Treasury note (10_YEAR) used to
determine rates on loans including mortgages rose 10 basis points
to 2.719%. That hit home builders, with PulteGroup Inc. (PHM) down
2.3%, D.R. Horton Inc. (DHI) off 1.5% and Lennar Corp. (LEN) off
2.6%.
"Home builders got grossly overvalued. When the Fed taper comes,
and interest rates rise, is the housing recovery strong enough to
support rising rates? The Fed's caught between a rock and a hard
place," said Raich.
A report released by the Commerce Department ahead of the open
showed retail sales rose 0.2% last month after a 0.6% gain in June
that was larger than initially estimated. Retail sales excluding
cars, gasoline and building materials climbed at their fastest pace
in seven months.
"Consumers are still spending, although limited income growth
appears to also be holding spending increases in check," Jim Baird,
chief investment officer at Plante Moran Financial Advisors, wrote
in emailed research.
The dollar(DXY) gained against the currencies of major U.S.
trading partners, including the yen (USDJPY) and the euro
(EURUSD).
Halting a four-session rise, the price of gold futures(GCZ3)
fell $13.70, or 1%, to end at $1,320.50 an ounce. Crude oil for
September delivery (CLU3) climbed 72 cents, or 0.7%, to $106.83 a
barrel.
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