NEW YORK, July 21 (AFP) - US shares kept upward momentum Wednesday in the wake of upbeat economic comments from Fed chairman Alan Greenspan and Microsoft`s announcement of a massive cash payout to shareholders.
Blue chips were leading the gains as the Dow Jones Industrial Average advanced 63.87 points (0.63 percent) to 10,212.94 at 1540 GMT.
The tech-heavy Nasdaq composite added a more modest 1.17 points (0.06 percent) to 1,918.24 while the Standard and Poor`s 500 broad-market index edged up 3.68 points (0.33 percent) to 1,112.35.
The market maintained its momentum from Tuesday`s rally, helped by Greenspan`s remarks in Congress in which the central bank chief brushed aside the recent economic softness.
"The Fed chairman was very upbeat in his assessment of the current economy, saying GDP growth is likely to accelerate in the second half of 2004," said Alfred Goldman at AG Edwards.
"He dismissed the recent soft economic data as temporary and said that rising interest rates will not hurt the financial markets or households."
Meanwhile, the markets were upbeat about Microsoft, which said it will tap its massive cash reserve to deliver 75 billion dollars to shareholders in dividends and share buybacks.
"We believe the company has made the right moves in distributing value back to its shareholders," said Jason Maynard at Merrill Lynch.
"The company`s use of cash has been a looming question over the stock and with those questions resolved, we believe the stock can move higher."
This is a boost for the market "because Microsoft is such a strong component of the major indices," said Paul Mendelsohn, chief investment strategist at Windham Financial Services.
"In addition, earnings are coming in quite nicely. What we`re seeing is a technical bounce off very oversold conditions, coming off very critical support points that we came down to in tech the last couple of days."
Technical strategist Bob Dickey at RBC Dain Rauscher said it was not clear whether Wall Street was starting to emerge from its torpor or continuing to drift in a trading range.
"In order to turn this ship around, we likely need to see some better action in terms of higher volatility and more volume," he said.
"We believe this would serve to flush more of the sellers out, and would also be an indication that the buyers were becoming more aggressive. Otherwise, we see most of this rather tame daily action as being just more of the same posturing within the overall correcting trend."
Microsoft shares rallied 92 cents to 29.24 after its announcement of a big share buyback and dividend payments.
Among other active shares, General Motors advanced 47 cents to 44.07 after a better-than-expected earnings report from the world`s biggest automaker.
Among others reporting earnings, Merck rose 82 cents to 45.65, Lucent added eight cents to 3.48, Pfizer climbed 31 cents to 32.64 and JP Morgan Chase gained 1.05 to 37.45.
But American Airlines parent AMR fell three cents to 9.34, as it reported a slim profit of six million dollars while warning that the industry`s woes are far from over.
In technology, Sun Microsystems dipped seven cents to 4.04, Texas Instruments slid 1.01 to 20.75 and Motorola fell 27 cents to 15.82 in reaction to earnings this week.
Bonds remained on the defensive in the wake of the strong economic outlook from Greenspan The yield on the 10-year US Treasury bond jumped to 4.503 percent from 4.448 percent and that on the 30-year bond to 5.223 percent from 5.184 percent. Bond yields and prices move in opposite directions.