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Stocks struggle to hold gains

NEW YORK, July 22 – US stocks struggled to hold onto opening gains Tuesday amid another batch of better-than-expected earnings reports that bolstered hopes that the economy is heading for an exit from recession.

The Dow Jones Industrial Average added 46.41 points (0.52 percent) to 8,894.56 at 1515 GMT, extending for a second day last week\’s powerful rally.

The technology-heavy Nasdaq fell 4.52 points (0.24 percent) to 1,904.77 while the broad Standard & Poor\’s 500 index was essentially flat, up 0.04 point (0.00 percent) at 951.17.

The action came after stocks rallied Monday, extending hefty gains from last week, with the Dow up 1.19 percent, the Nasdaq 1.20 percent and the S&P 1.14 percent.

After opening higher, the market pared its gains as investors waded through earnings reports.

"The Street is digesting a slew of earnings reports from several Dow members, highlighted by Caterpillar\’s trouncing of analysts\’ estimates and upbeat EPS (earnings per share) guidance," Charles Schwab & Co. analysts said in a client note.

Caterpillar shored up the blue-chip index with earnings that were three times higher than the consensus forecast estimate and issued higher than expected guidance for its 2009 fiscal year.

The agriculture and construction equipment giant, which reported results before the market opened, vaulted 10.61 percent to 40.54 dollar.

Merck also provided firm support to the Dow, adding 4.36 percent to 29.16 dollars. The drug maker posted a 12 percent decline in second-quarter net profit that was not as bad as the market expected, and confirmed its outlook for 2009.

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 Among other blue-chip stocks reporting earnings, Coca-Cola rose 1.04 percent to 41.84 dollars, DuPont edged up 0.07 percent to 28.35 dollars and United Technologies fell 1.26 percent to 54.28 dollars.

The market also was closely watching Federal Reserve chairman Ben Bernanke\’s semiannual economic update to Congress.

Bernanke told lawmakers the central bank would likely continue to hold its historically easy monetary policy "for an extended period" despite signs of improvement in the economy and financial markets.

The Nasdaq was under pressure after nine straight sessions of gains. Yahoo!  dipped 0.88 percent to 16.86 dollars and Apple slipped 0.73 percent to 151.80 dollars; both companies were due to report earnings after the market close.

UAL Corp., the parent of United Airlines, soared 6.60 percent to 3.74 dollars after reporting a swing into second-quarter profit, of 28 million dollars.

Rival Continental Airlines, which posted deeper losses, plummeted 6.67 percent to 9.49 dollars.

CIT Group, the business lending giant that announced late Monday it had won a private emergency loan from bondholders to forestall bankruptcy, plunged 20.00 percent to 1.00 dollar.

"We shall see what we shall see, but the prevailing message from the early stages of the second-quarter reporting period is twofold. First, there is no denying that earnings are coming in better than expected," said Patrick O\’Hare of

"Secondly, it remains clear that cost-cutting is still the driving factor behind the positive surprises."

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Bonds advanced. The yield on the 10-year US Treasury bond dropped to 3.502 percent from 3.585 percent Monday and that on the 30-year bond fell to 4.417 percent from 4.466 percent. Bond yields and prices move in opposite directions.

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