Wall Street welcomed a forthright statement on interest rates from Federal Reserve Chairman Alan Greenspan on Tuesday, with investors sending stocks higher in acceptance of his tough stand on energy prices and inflation.
Greenspan said the Fed was prepared to abandon a gradual, measured series of rate hikes in favor of larger increases should higher oil prices trigger a more general rise in inflation.
While the prospect of larger and faster rate hikes unnerved Wall Street in the past -- and did so again in the early part of Tuesday's session -- many investors were reassured by Greenspan's straightforward statement, and noted that rate hikes in response to a strong economy fit past patterns of bull markets.
"I think because this statement was so crystal clear and unambiguous, we aren't seeing the major selling that we saw in the past," said Hugh Johnson, chief investment officer at First Albany. "He really hit this on the head, and there's no need to parse or interpret this. That makes it a lot easier for the markets to digest and account for."
The Dow Jones industrial average gained 41.44, or 0.4 percent, to 10,432.52. The Standard & Poor's 500-stock index rose 1.76, or 0.2 percent, to 1142.18, and the Nasdaq composite index climbed 2.91, or 0.1 percent, to 2023.53.
Oracle gained 17 cents, to $11.59, as its antitrust trial over its potential acquisition of PeopleSoft got underway. The database software maker said the deal would make the market for database software more competitive, not less. PeopleSoft rose 57 cents, to $19.03. Microsoft continued its own antitrust battles, filing an appeal of a European Union decision that would require the software giant to change its business practices. Microsoft climbed 17 cents, to $26.60.
Tribune dropped $1.76, to $46.92, after announcing Monday that it will cut more than 200 jobs at its newspapers because of falling advertising revenue. It also lowered its revenue forecasts for the year.
Hewlett-Packard gained 34 cents, to $22, after chief executive Carly Fiorina said the company will increase sales at a faster pace than the overall market. International Business Machines rose $1.40, or 1.6 percent, to $90.04, for the biggest gain in the Dow average.
* The New York Stock Exchange composite index fell 7.47, to 6603.42; the American Stock Exchange index fell 1.73, to 1208.78; and the Russell 2000 index of smaller-company stocks fell 0.99, to 577.91.
* Declining issues outnumbered advancing ones by 8 to 7 on the NYSE, where trading volume fell to 1.19 billion shares, from 1.2 billion on Monday. On the Nasdaq Stock Market, decliners outnumbered advancers by 5 to 4 and volume totaled 1.44 billion, down from 1.46 billion.
* The price of the Treasury's 10-year note was unchanged, and its yield rose to 4.77 percent, from 4.76 percent on Monday.
* The dollar rose against the Japanese yen and the euro. In late New York trading, a dollar bought 109.68 yen, up from 109.61 late Monday, and a euro bought $1.2264, down from $1.2315.
* Light, sweet crude oil for July delivery settled at $37.28, down $1.38, on the New York Mercantile Exchange.
* Gold for current delivery fell to $391.00 a troy ounce, from $393.70 on Monday, on the New York Mercantile Exchange's Commodity Exchange.
Bloomberg News contributed to this report.