- The Washington Times - Wednesday, July 22, 2009

NEW YORK | The stock market rode higher on more good earnings news, extending a weeklong rally.

Stocks ended with moderate gains Tuesday, after a day of back-and-forth trading, as investors juggled better-than-expected results from Caterpillar Inc. with worries about regional banks.

Investors also digested a mixed report from Federal Reserve Chairman Ben S. Bernanke, who said the economy is still on track to recover this year, but slowly. He also predicted rising unemployment.

Analysts said the market’s more subdued tone was natural after stocks surged more than 8 percent since the start of last week.

Caterpillar joined other major companies in issuing an improved 2009 profit forecast. Second-quarter profits fell 66 percent but still came in well ahead of expectations. Shares in the heavy equipment maker, considered a bellwether of the global economy, rose about 8 percent.

Banks stumbled after Regions Financial Corp., Comerica Inc. and Zions Bancorp posted second-quarter losses that stirred worries about rising loan losses.

Meanwhile, unease about small-business lender CIT Group Inc. flared up again after the company said a $3 billion loan from bondholders still might not be enough to cover a cash drain. The stock market had risen broadly Monday on hopes the company would be able to avoid bankruptcy.

David Chalupnik, head of equities at First American Funds, said the market seemed to be taking a breather after its recent run and that it could be harder for stocks to press higher because investors are becoming harder to impress.

“Expectations are being ramped up,” he said. “As earnings continue to come out better than expected you may not get that lift anymore.”

The Dow Jones Industrial Average rose 67.79, or 0.8 percent, to 8,915.94. That is the seventh straight gain for the blue chips.

The Standard & Poor’s 500 Index rose 3.45, or 0.4 percent, to 954.58.

The Nasdaq Composite Index rose 6.91, or 0.4 percent, to 1,916.20, its 10th straight advance.

Technology shares could drive trading Wednesday. Chipmaker Advanced Micro Devices Inc. slid in after-hours trading after posting a wider-than-expected loss after the bell, while Apple Inc. rose after reporting a 15 percent jump in profits.

Tech stocks have led the market’s rally from 12-year lows in early March. The Nasdaq is up 21.5 percent for the year, compared with 5.7 percent for the S&P; 500 and 1.6 percent for the Dow.

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