NEW YORK – U.S. stocks rose on Wednesday, helped by another drop in oil prices and a firmer dollar, with investors buying up battered shares of refiners as well as mining firms after Xstrata’s $10 billion hostile bid for Lonmin, the world’s third-largest platinum miner.

Technology stocks were also well bid after networking equipment-maker giant Cisco Systems’ results topped estimates.

“The fact that we have lower oil and a strong dollar is propelling stocks and extending the post-Fed rally,” said Peter Cardillo, chief market economist at Avalon Partners.

“The market is hanging its coat on the idea that the global economy is slowing down – and that’s the reason oil is going down – but not going into recession,” he said.

The Dow Jones Industrial Average gained 40 points, or 0.4 percent, to 11,656, with 16 of its 30 components rising, led by a 3.4 percent gain in shares of Caterpillar Inc. and a 1.6 percent gain in shares of Alcoa Inc.

On Tuesday, stocks surged as oil prices continued to slide and as the Federal Reserve kept interest rates steady while giving no hints it might change course on monetary policy any time soon.

Among declining blue-chips were shares of American International Group., which dipped 1.3 percent ahead of posting results after the close. Societe Generale initiated coverage of the firm with a sell rating.

The S&P 500 index rose 4.3 points to 1,289, while the technology-heavy Nasdaq Composite rose 28 points to 2,379.

Leading tech shares, Cisco Systems rose 5.6 percent after quarterly results at the networking-equipment bellwether topped analysts’ expectations. Jefferies & Co. analyst Bill Choi said the results show signs of stabilization in the enterprise market and said the company’s forecast for the first half of fiscal 2009 was conservative.

In energy trading, oil futures continued to fall, with crude for September delivery ending down 59 cents at $118.58, after news of an unexpected increase in last week’s U.S. inventories.

The dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, was at 74.258, up from 73.948 in late North American trading Tuesday.

Trading volumes showed 1.2 billion shares trading on the New York Stock Exchange and 901 million trading on the Nasdaq stock market. Gaining shares topped decliners by a margin of 17 to 13 on the NYSE and by 16 to 11 on the Nasdaq.

Wednesday’s focus shifted back to quarterly results, with ailing financials again in the spotlight.

Freddie Mac slumped 19 percent as it reported a wider-than-forecast $821 million loss, cut its dividend and said it’s considering issuing more stock.

Ambac Financial, the bond insurer, reported a second-quarter profit due to credit derivative gains, but its operating loss was worse than forecast. Still, Ambac’s shares rallied 23 percent.

Societe Generale started coverage of AIG and peer Travelers at sell, noting that question marks continue to hang over risk controls and the efficiency of capital allocated per activity. Analysts also took a negative view of the U.S. commercial lines market.

Media giant Time Warner reported a 26 percent profit drop for the second quarter on declining contributions from its AOL and publishing arms.

News Corp. reported a 27 percent quarterly profit rise on the back of its film and cable businesses, though its chief financial officer said revenue growth would slow. News Corp. owns MarketWatch, the publisher of this report.



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Distributed by McClatchy-Tribune Information Services.

AP-NY-08-06-08 1723EDT


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