Stocks Rebound; Yields Move Up

Stocks rebounded Friday after three days of losses, helped by some upbeat profit reports.

Bonds continued to struggle, as Treasury yields edged up to the highest levels since April.

Wall Street slid at the opening, following heavy selling in technology stocks Thursday. But market bulls quickly got the upper hand, and the rally gained steam through the session, though volume was muted.

Winners topped losers by 2 to 1 on the New York Stock Exchange and by 18 to 13 on Nasdaq.

Leadership remained with blue chip stocks for a second day: The Dow Jones industrials gained 137.33 points, or 1.5%, to 9,188.15 and the Standard & Poor’s 500 rose 11.59 points, or 1.2%, to 993.32.

By contrast, the technology-dominated Nasdaq composite eked out a gain of 10.48 points, or 0.6%, to 1,708.50.

Nasdaq had led the sell-off Thursday, diving 2.9%, while the Dow was off 0.5%.

Some analysts said investors may be turning cautious on tech shares after their three-month surge. The focus Thursday and Friday was on non-tech issues, including some old-line industrial firms that could get a boost from a stronger economy.

Heavy equipment maker Caterpillar, which shot up $5.25 on Thursday after reporting healthy second-quarter earnings, rose $2.07 to $65.61 on Friday.

Other winners in the industrial sector included Dupont, up 97 cents to $42.57; PPG Industries, up $1.17 to $52.41; and Dover, up $2.26 to $34.53.

Other blue chips also attracted buyers. McDonald’s rose 90 cents to $21.39 after brokerage Bear Stearns upgraded the stock to “outperform” from “peer perform,” in part citing expectations of a big dividend increase.

For the week, the Dow gained 0.8%, while the S&P; 500 lost 0.5% and Nasdaq sank 1.5%.

Optimism about the economic outlook was helped Friday by the University of Michigan’s report that its consumer sentiment index rose to 90.3 this month from 89.7 in June.

Earnings reports from some tech firms also provided an upbeat tone. Microsoft, which reported earnings late Thursday, rose as high as $27.23 but closed at $26.89, up 20 cents.

Cellular phone maker Ericsson soared $1.78 to $12.57 after posting a narrower-than-expected quarterly loss. That contrasted with rival Nokia’s performance Thursday: Its shares tumbled $3.57 that day after forecasting weaker-than-expected sales this quarter.

On Friday Nokia added 38 cents to $14.76. But many tech stocks struggled. Intel eased 27 cents to $24.66; Yahoo lost 71 cents to $29.90.

For bonds, it was the end of a week that saw the worst one-day sell-off in five years (Tuesday), as investors fretted that a healthier economy might push interest rates up. The 10-year Treasury note yield ended at 4% on Friday, up from 3.92% on Thursday and 3.63% a week ago.