US stocks up after economic, earning data

NEW YORK -- The stock market advanced Tuesday, with investors encouraged by a surprising rebound in New York area manufacturing, and better-than-expected profits at Johnson & Johnson and financial services companies U.S. Bancorp and M&T Bank Corp.

After a spate of disappointing readings on the economy, investors were pleased the New York Federal Reserve reported that regional manufacturing expanded modestly in April, after shrinking at a record clip in March. Economists, on average, had been expecting another contraction.

In another positive sign for Wall Street, health care products maker Johnson & Johnson said its first-quarter profit jumped 40 percent on rising sales and a slight decline in costs. Results from the maker of consumer staples ranging from diapers to drugs came as a relief to investors, following a spate of mostly disappointing earnings reports last week and Monday.

And any positive news from the ailing financial sector has tended to give stocks a boost. U.S. Bancorp's quarterly report was particularly reassuring because the company said its credit problems will continue to be manageable.

The market, however, remains concerned about inflation. As crude oil prices surged to a record near $114 a barrel, the Commerce Department's Producer Price Index registered a much higher-than-anticipated 1.1 percent rise for March. The core index, which strips out food and energy prices, rose by 0.2 percent, as expected.

Core producer price increases have slowed over the past three months, so most investors are not too worried that inflation will keep the Federal Reserve from lowering interest rates again if the economy weakens further. However, food and energy prices keep rising, so consumers have been paring back their discretionary spending to afford necessities -- and that is hurting corporate profits.

In the first hour of trading, the Dow Jones industrial average rose 58.37, or 0.47 percent, to 12,360.43.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 6.85, or 0.52 percent, to 1,335.17, and the Nasdaq composite index rose 12.43, or 0.55 percent, to 2,288.25.

Bond prices dipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.55 percent from 3.51 percent late Monday.

U.S. Bancorp shares rose 27 cents to $31.94 after releasing its first-quarter results, while M&T Bank rose $3.63, or 4.5 percent, to $84.38. Both banks' profits benefited from the initial public offering of Visa Inc. in March.

Late Monday, Delta Air Lines Inc. and Northwest Airlines Corp. agreed to combine in a stock-swap deal that will create the world's biggest airline. But investor appeared uneasy -- Delta fell 88 cents, or nearly 9 percent, to $9.60, while Northwest slipped 33 cents, or nearly 3 percent, to $10.89.

Gold prices also rose, while the dollar was mixed against other major currencies.

Overseas, Japan's Nikkei stock average rose 0.77 percent. Britain's FTSE 100 rose 1.02 percent, Germany's DAX index fell 0.12 percent, and France's CAC-40 slipped 0.01 percent

(Agencies)