NEW YORK (AFP) - A better-than-expected profit outlook from Ford juiced up trading on Wall Street, with gains capped by a lackluster reading on consumer sentiment and a fresh rise in oil prices.
The Dow Jones Industrial Average gained 39.97 points (0.39 percent) to close at 10,284.46 while the tech-heavy Nasdaq added 6.01 points (0.32 percent) to 1,910.09.
The Standard and Poor's 500 index moved up 5.05 points (0.45 percent) to 1,128.55.
While Wall Street has been concerned about fading earnings, the automaker offered good news by raising its third quarter and full-year guidance.
"Ford's news was very positive," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "It took the market by surprise."
Mendelsohn said however the price of oil will continue to remain a focus. Oil prices shot upward -- up 1.71 dollars to 45.59 dollars in New York -- as traders assessed the impact of Hurricane Ivan on supplies, and another storm loomed.
Stocks pared gains after the University of Michigan reported an erosion in consumer sentiment. Its consumer sentiment index slipped to 95.8 from 95.9 in August, below the consensus forecast of an improvement to 96.7.
The report dampened hopes a rebound in consumer spending, which represents two-third of US economic activity.
"While off the lows hit in early 2003, at this level consumer sentiment implies that consumer spending should remain subdued in the near term," said Merrill Lynch economist Sheryl King.
"Clearly, sluggish job growth and struggling equity markets are keeping consumer sentiment in the doldrums."
European stock markets posted solid gains, lifted by a strong opening on Wall Street.
The British FTSE 100 index rose 0.76 percent to 4,591.0, the German DAX 30 climbed 0.62 percent to 3,988.07 and the French CAC 40 advanced 0.94 percent to 3,726.22.
The DJ Euro Stoxx 50 index firmed 0.82 percent to 2,788.64.
Ford, which said its earnings would be above expectations after special charges for cuts to its Jaguar operations, rallied 27 cents or 1.9 percent to 14.22.
Others in the sector followed Ford higher: General Motors edged up two cents to 42.05 and DaimlerChrysler added 17 cents to 43.10.
Oil company shares were buoyed by higher crude prices. ExxonMobil climbed 82 cents to 48.37, ChevronTexaco rallied 97 cents to 51.94 and ConocoPhillips advanced 84 cents to 79.13.
Elsewhere, shares of Qualcomm fell 1.57 or 3.9 percent to 38.83 after the wireless equipment maker said a review of its accounting for royalties may reduce fourth-quarter pre-tax earnings by 298 million dollars.
In the troubled semiconductor area, Texas Instruments advanced 49 cents to 22.08 after announcing it was upping its dividend payment and planning a one billion dollar stock repurchase plan.
Bonds pulled back slightly a day after a strong rally. The yield on the 10-year US Treasury bond rose to 4.127 percent from 4.069 percent Thursday and that on the 30-year bond to 4.917 percent against 4.876 percent. Bond yields and prices move in opposite directions.