NEW YORK - Investors encouraged by a bullish outlook from Federal Reserve Chairman Alan Greenspan sent stocks higher Tuesday, relieved by his continued belief that the economy would not slip into a recession.
In a speech broadcast at a meeting of central bankers in Bejing, Greenspan said the economy would remain strong, even as global long-term interest rates are low. He also encouraged China to unpeg its currency, the yuan, from the U.S. dollar; some investors believe the yuan has unfairly weighed on the greenback in international markets.
Wall Street had been worried that economic slowdown would accelerate, and had been looking to Greenspan and the Fed for reassurance. The Fed's Open Market Committee meets June 29-30.
In morning trading, the Dow Jones industrial average rose 65.84, or 0.6 percent, to 10,532.87.
Broader stock indicators also moved higher. The Standard & Poor's 500 index was up 7.38, or 0.6 percent, at 1,204.89, and the Nasdaq composite index gained 10.49, or 0.5 percent, to 2,086.25.
The bond market also rallied as stocks rose. The yield on the 10-year Treasury note fell to 3.90 percent from 3.95 percent late Monday. The dollar fell against most major currencies, while gold prices made gains.
Oil prices slid for a second straight session, with a barrel of light crude quoted at $54.30, down 19 cents, on the New York Mercantile Exchange.
In company news, General Motors Corp. said it will cut 25,000 jobs by 2008 as it attempts to rein in spending. Chief Executive Rick Wagoner said the automaker expects to close additional assembly and component plants as well. GM gained 60 cents to $31.02.
Wall Street firm Morgan Stanley climbed 45 cents to $49.56 even after another top employee left the company. Managing director David Topper, a 22-year veteran, resigned to work for JPMorgan Chase & Co. as co-head of its U.S. equity capital markets position, according to The New York Times. JPMorgan Chase rose 31 cents to $35.82.
Sears Holding Corp. posted a loss for the quarter, its first earnings report since Kmart Holding Corp. merged with Sears, Roebuck and Co. The company lost 7 cents per share, though would have turned a profit without one-time acquisition charges. Sears tumbled 6.2 percent, or $9.62, to $145.29.
Albertson's Inc. rose 36 cents to $21.86 after the nation's second-largest grocery store chain tripled its quarterly earnings from a year ago. Alberton's credited the addition of the Shaw's chain as well as continued recovery in southern California from last year's grocery worker strike.
With the third quarter ending this month, companies are starting to issue forecasts for their results. ConAgra Foods Inc. slid $1.43 to $24.46 after the company said it could miss Wall Street's quarterly earnings targets by as much as 10 cents per share. The food processor is also cutting several hundred jobs in an effort to save up to $100 million a year.
Monsanto Co., on the other hand, increased its profit forecasts due to stronger sales, though the agricultural products maker said its one-time charges related to recent acquisitions would increase. Monsanto gained $3.49 to $62.29.
Advancing issues outnumber decliners by about 5 to 2 on the New York Stock Exchange, where volume came to 160.86 million shares, compared with 123.71 million at the same point on Monday.
The Russell 2000 index of smaller companies was up 5.03, or 0.8 percent, at 627.97.
Overseas, Japan's Nikkei stock average fell 0.47 percent. In afternoon trading, Britain's FTSE 100 was up 0.39 percent, Germany's DAX index climbed 0.83 percent, and France's CAC-40 rose 0.27 percent.
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