Stocks rise after slow start to extend weeklong gains; Apple, Starbucks push Nasdaq higher

Stocks turn higher to extend weeklong rally

NEW YORK — Investors are holding off from making more big bets on the economy.

Stocks turned mostly higher in afternoon trading Wednesday after a back-and-forth start. Traders are hesitant to push much further into the market following a surge in stocks over the past week.

The day’s earnings reports gave reasons for both hope and concern. Apple Inc. and Starbucks Inc. jumped after beating analysts’ estimates but chip maker Advanced Micro Devices Inc. and major bank Wells Fargo & Co. fell after reporting disappointing results.

Strong corporate earnings for the April-June quarter have pushed major stock indicators up more than 8 percent in the past seven days. The surge has restarted a rally that ran from early March through mid-June before stalling on a scarcity of signs that the economy was stabilizing.

The latest gains have pushed the Dow Jones industrial average up enough to erase its losses for the year and to its highest level since January. The benchmark Standard & Poor’s 500 index is at levels not seen since November.

Analysts warn that the stock market could have a harder time advancing because investors are now expecting more polished results. Of the approximately 100 companies in the S&P 500 index that have posted results, 62 percent have topped analysts’ expectations, according to S&P.

“As the earnings season goes on it becomes more difficult because the bar goes higher and higher,” said John Canally, economist at LPL Financial in Boston.

In early afternoon trading, the Dow rose 16.86, or 0.2 percent, to 8,932.80. The broader Standard & Poor’s 500 index rose 4.39, or 0.5 percent, to 958.97, and the Nasdaq composite index rose 15.20, or 0.8 percent, to 1,931.40, helped by quarterly results at Apple and Starbucks.

Major market indexes seesawed for much of Tuesday, but managed to end higher. Investors battled worries over rising loan losses at regional banks and a mixed report from Federal Reserve Chairman Ben Bernanke, who cautioned that the economy’s recovery will be gradual because of rising unemployment.

Bernanke continued his two-day address to Congress on Wednesday, speaking in front of the Senate Banking Committee. He again warned that high unemployment is “the most pressing issue” as the country tries to dig out from the longest recession since World War II.

Another rush of earnings reports directed trading again Wednesday. Apple surpassed Wall Street’s expectations in both profit and revenue on robust sales of laptops and iPhones. Its shares rose $5.74, or 3.8 percent, to $157.25.

Starbucks surged $2.86, or 19.5 percent, to $17.55 after the coffee chain shut stores, laid off workers and cut other costs to produce fiscal third-quarter results that topped expectations.

Advanced Micro fell 52 cents, or 12.8 percent, to $3.56 after its second-quarter loss narrowed less than analysts expected.

Whirlpool, the world’s largest maker of major home appliances, said its second-quarter profit dropped 33 percent on weak consumer demand. The stock fell $5.62, or 10 percent, to $50.72.

Wells Fargo & Co. reported that its earnings jumped 47 percent in part because of its acquisition of Wachovia Corp. But the company said that losses from bad loans kept rising. The stock fell 56 cents, or 2.2 percent, to $24.79.

Analysts say worries about deteriorating credit and messy balance sheets are keeping some investors from embracing better-than-expected results from banks.

“Some of these financials reported what seemed like good numbers but it’s hard to see through all the smoke with everything that’s going on with the banks nowadays,” said Terry L. Morris, senior equity manager at National Penn Investors Trust Co. in Wyomissing, Pa.

Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.53 percent from 3.48 percent late Tuesday.

The dollar was mixed, while gold prices fell.

Light, sweet crude fell 5 cents to $65.56 a barrel on the New York Mercantile Exchange.

About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 572.7 million shares compared with 660.9 million shares traded at the same point Tuesday.

The Russell 2000 index of smaller companies rose 4.29, or 0.8 percent, to 529.51.

Overseas, Britain’s FTSE 100 rose 0.3 percent, Germany’s DAX index gained 0.5 percent, and France’s CAC-40 added 0.1 percent. Japan’s Nikkei stock average rose 0.7 percent.