US stocks flat amid higher oil price

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Shares in eBay rose sharply thanks to an analyst upgrade, pulling up other internet stocks in their wake. But the broader market was flat, caught between positive economic news and a renewed surge in oil prices.

Mark Mahaney, analyst at Smith Barney, upgraded shares in the world’s leading internet auctioneer to “buy” from “hold”, saying eBay’s latest results were pointing to sustainable growth.

Shares in eBay rose 4.4 per cent to $43.61, while Google added 1.3 per cent to $291.61. Meanwhile, Yahoo lost earlier gains from the session, and ended the day flat at $33.33.

Energy stocks saw buying as oil prices rose to $61.76 a barrel, triggering hopes for increased profits in the sector, which has already had a strong year so far.

The oil price spike followed the death of King Fahd of Saudi Arabia, the world’s largest exporter of oil. Shares in ExxonMobil, the Dow component, rose 0.8 per cent to $59.23 while Kerr-McGee put on 1.7 per cent to $81.53.

In the broader market, technology outperformed blue-chips. By the close, the S&P 500 rose 0.1 per cent to 1,235.35 and the Dow Jones Industrial Average fell 0.2 per cent at 10,623.15. The Nasdaq Composite added 0.5 per cent to 2,195.38.

A widely watched gauge of industrial activity registered its highest level so far this year, fanning hopes that the manufacturing slowdown earlier this year would prove shortlived. The Institute of Supply Management’s manufacturing index rose to 56.6 in July from 53.8 in June.

Among companies reporting on Monday was Dow component Procter & Gamble. The household goods conglomerate said its fiscal fourth-quarter net profit exceeded forecasts with a 9 per cent rise. P&G’s health and family division, which includes the Pampers brand, saw sales growth of 13 per cent. However, tepid guidance sent Procter’s shares down 0.6 per cent to $55.32.

Wal-Mart, which sells most of Procter’s wares, saw shares advance 0.4 per cent to $49.53 as it reported monthly sales growth at the higher end of its estimates.

RadioShack jumped 14.1 per cent to $26.78 after it announced a 10-year
agreement to sell Cingular Wireless’ cellular phone services. Verizon Communications, whose wireless division used to have RadioShack as an outlet, saw shares ease 0.7 per cent to $33.98. Humana, the health insurer, announced its full-year 2006 earnings would increase by at least 26 per cent, but was a little more cautious about the current year as it reported earnings in line with expectations. The stock was up 7.0 per cent to $42.62.

Tyson Foods, the meat processor, saw its shares fall after second-quarter profits missed expectations after settlement costs associated with lawsuits from pork farmers. The shares dropped 3.7 per cent to $17.95.

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