US stocks climb to one-month highs

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US stocks climb to one-month highs

General Electric delivered a shot of confidence to US investors when it raised its dividend on Friday, pushing the S&P 500 through the key 1,100 level. A report that just seven European Union banks would fail stress tests also bolstered sentiment.

GE gained nearly 4 per cent in high volume after the US conglomerate increased its quarterly dividend by 20 per cent. GE's move spurred heavy institutional buying and sparked a decisive move higher, a positive sign of rising investor optimism.

The Dow Jones industrial average gained 102.32 points, or 0.99 per cent, to 10,424.62. The Standard & Poor's 500 Index rose 8.99 points, or 0.82 per cent, to 1,102.66. The Nasdaq Composite Index added 23.58 points, or 1.05 per cent, to 2,269.47.

What you need to know
SPI 200 futures up 43 to 4479 points
Australian dollar rises to 89.7 US cents
Oil futures steady at $US79 a barrel
Gold futures ease $US6 to $US1189 an ounce
European stocks notch weekly gains
Wall Street week ahead: breakout beckons
Your calendar of events July 26-30

Australian markets are poised for a rise when trading resumes on Monday, with the SPI 200 futures index up 43 points to 4479 points. Yesterday, the benchmark S&P/ASX200 index ended the week up 83.7 points, or 1.9 per cent, at 4,458.4 points, while the broader All Ordinaries index gained 80.3 points, or 1.8 per cent, to 4,475.1 points.

For the week, the ASX200 rose 0.8 per cent, making it the first stretch of three weekly gains in a row since the middle of April.

The Australian dollar rose overnight, to trade at 89.7 US cents. It was also buying 78.4 yen, 69.5 euro cents and 58.2 pence.

On commodity markets, oil futures were steady at $US79 a barrel, while gold futures eased $US6 to $US1189 an ounce.

Earnings boost

The wide-ranging impact GE has on the economy, coupled with another round of strong earnings, bolstered investor confidence.

"GE is a company whose tentacles extend throughout large parts of the economy, and (the hike) clearly shows they're (having) a bit more visibility on their future cash flows," said Adrian Cronje, chief investment officer of Atlanta-based wealth management firm Balentine.

Still, he noted the new 12 cent dividend was far below the 31 cents per quarter the company paid its shareholders before February 2009.

The S&P 500 rose above 1,100 for the first time in a month. The gain - along with other chart moves, such as an uptick on its daily moving average convergence-divergence, or MACD - sent a bullish technical signal to investors.

The Nasdaq erased losses for the year and ended flat while the Dow and S&P 500 remained negative so far in 2010.

Honeywell

Manufacturers Honeywell International Inc and Ingersoll-Rand Plc posted better-than-expected results and raised full-year earnings views, further allowing investors to push aside fears of a return to negative growth..

Honeywell added 2 per cent to $US43.50 and Ingersoll-Rand gained 1.3 per cent to $US37.29.

"On the whole the earnings season has been strong," said Anton Schutz, who manages the Burnham Financial Funds as president at Mendon Capital in Rochester, New York.

"I think you got a pretty resilient economy despite the headlines."

Verizon jumped 15.4 per cent to $US62.52 after French drugmaker Sanofi-Aventis approached the biotechnology company about an acquisition.

Hoping to ease fears over any impact from the euro zone debt crisis, European regulators assessed how banks would cope with another downturn. Seven of 91 banks failed the tests, fewer than expected, but analysts questioned whether the tests were tough enough.

About 8.5 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 4 to 1, while on the Nasdaq, about seven stocks rose for every two that fell.

Reuters

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