A bullish assessment of the economy by Federal Reserve Chairman Alan Greenspan sent stocks moderately higher Tuesday but failed to give the market a major spark in what was generally a quiet session.
Greenspan's testimony before the Senate Banking Committee, in which he praised the economy's overall health, cheered investors somewhat. However, the Fed chairman did warn again that the central bank would keep a close eye on prices and inflation, and would aggressively raise interest rates if necessary.
"Unfortunately right now, I think investors need time to get acclimated to the economic environment going forward, rising rates, the earnings growth slowdown, things like that," said Scott Wren, equity strategist for A.G. Edwards & Sons. "I don't think earnings will be the story here unless they really disappoint. It's purely a matter of time for us to break out of this slump."
The Dow Jones industrial average rose 55.01, or 0.5 percent, to 10,149.07. The Standard & Poor's 500-stock index gained 7.77, or 0.7 percent, to 1108.67. The Nasdaq composite index advanced 33.24, or 1.8 percent, to 1917.07.
Greenspan's testimony came after a disappointing housing report from the Commerce Department. Construction began on 1.8 million units in June, an 8.5 percent drop from May and the lowest level in more than a year.
Combined with rising interest rates, a dip in consumer spending and profit warnings from major corporations for the rest of the year, the lack of activity in the construction sector gave investors more to worry about.
Many investors were on the sidelines, waiting to see Microsoft's earnings, to be released late Thursday. After the regular session ended Tuesday, the software maker announced a special one-time dividend of $3 per share and said it would double its annual dividend to 32 cents per share. Microsoft, which finished the regular session up 37 cents at $28.32, surged $1.50 in extended trading.
In earnings reports Tuesday, Ford Motor's profit nearly tripled in the second quarter from a year ago, lifted by record earnings at its finance arm and improved business in Europe. Ford fell 38 cents, to $14.60. Altria Group's second-quarter profit rose 7.8 percent, helped by a weak dollar and a favorable tax rate. Its shares slipped 6 cents, to $48.77.
Corning surged $1.42, to $12.69, after it announced a profitable second quarter, reversing the losses of a year ago. The company credited increased demand for its telecommunications and display products.
* The New York Stock Exchange composite index rose 26.37, to 6473.03; the American Stock Exchange index fell 1.70, to 1261.48; and the Russell 2000 index of smaller-company stocks rose 9.46, to 564.19.
* Advancing issues outnumbered declining ones by 3 to 2 on the NYSE, where trading volume rose to 1.44 billion shares, from 1.31 billion on Monday. On the Nasdaq Stock Market, advancers outnumbered decliners by 2 to 1 and volume totaled 1.58 billion, down from 1.75 billion.
* The price of the Treasury's 10-year note fell $6.88 per $1,000 invested, and its yield rose to 4.44 percent, from 4.36 percent on Monday.
* The dollar rose against the Japanese yen and the euro. In late New York trading, a dollar bought 108.57 yen, up from 108.23 late Monday, and a euro bought $1.2335, down from $1.2439.
* Light, sweet crude oil for August delivery settled at $40.86, down 78 cents, on the New York Mercantile Exchange.
* Gold for current delivery fell to $401.90 a troy ounce, from $405.60 on Monday, on the New York Mercantile Exchange's Commodity Exchange.