(Updates to afternoon)
* GM shares jump on stronger-than-expected June sales
* Financial shares turn around in afternoon trading
* Higher oil still stirring caution
By Kristina Cooke
NEW YORK, July 1 (Reuters) - U.S. stocks edged higher on
Tuesday after embattled automaker GM <GM.N> surprised Wall
Street with stronger-than-expected June sales and financials
reversed earlier losses as investors scoured for bargains,
overshadowing concerns about rising oil prices.
General Motors' <GM.N> shares shot up 10 percent and were
among the top contributors to the Dow's gains. Rival Ford
<F.N>, whose shares had dropped earlier on its June sales
slump, reversed course to turn higher. GM's report helped ease
some concerns about the impact of high fuel costs on profits.
Financial shares, which had earlier led decliners in the
S&P 500, turned higher. Lehman Brothers <LEH.N> rose 6.7
percent after Morgan Stanley initiated coverage of the
investment bank's shares with an "overweight rating."
But concerns about inflation continued to weigh on the
market. U.S. crude oil futures <CLc1> rose 97 cents to settle
at a record $140.97 a barrel on continued Mideast tensions and
supply concerns raised by a report from the International
Energy Agency.
"Two letters: GM. We're oversold and so with so many
people looking for that bounce, any news that is a little
better than expected is going to get a bit of a rebound
going," said Joe Saluzzi, co-manager at Themis Trading in
Chatham, New Jersey. "People were just looking for a reason to
jump in and buy the beaten-down stocks."
The Dow Jones industrial average <> was up 2.69
points, or 0.02 percent, at 11,352.70. The Standard & Poor's
500 Index <.SPX> was up 0.97 of a point, or 0.08 percent, at
1,280.97. The Nasdaq Composite Index <> was up 4.77
points, or 0.21 percent, at 2,297.75.
General Motors shares jumped 5.3 percent to $12.13.
Earlier, a report showed U.S. manufacturing expanded in
June for the first time in five months, helped by a weak
dollar, but inflation pressures soared to their highest since
the stagflation-ravaged 1970s.
Apple <AAPL.O> shares rose 4.1 percent to $174.38 and were
the top boost to the Nasdaq, after Sanford C. Bernstein raised
its price target on the stock of the iPod maker.
Among financial shares, Lehman Brothers rose 4.9 percent
to $20.78. An index of S&P financial stocks <.GSPF> rose 0.5
percent.
Shares of commercial lender CIT Group Inc <CIT.N>
skyrocketed more than 27 percent to $8.69 after the company
agreed to sell its home lending business and other housing
portfolio holdings.
Apart from the ISM data, a report by the government showed
U.S. construction spending fell 0.4 percent in May as home
building continued to deteriorate. The data will add to
concerns that the United States has entered a period of weak
growth accompanied by high inflation.
(Editing by Jan Paschal)
