(Updates to midday, changes byline)
By Cal Mankowski
NEW YORK, May 1 (Reuters) - U.S. stocks rose on Thursday
as investors snapped up technology bellwethers, including
Apple Inc <AAPL.O> and IBM <IBM.N>, and a stronger dollar
eased investor worries about high energy costs and inflation.
Shares of Apple and BlackBerry device maker Research In
Motion Ltd <RIM.TO><RIMM.O> helped drive the Nasdaq up more
than 2 percent.
As tech shares gained, energy companies' stocks fell, a
trend aided by disappointing quarterly results from oil
company Exxon Mobil Corp <XOM.N>.
Crude oil futures for June fell $2.56, sinking below $111
per barrel. The S&P index of energy shares <.GSPE> dropped 3.6
percent.
The dollar rose to a five-week high against the euro,
knocking commodity prices lower a day after the Federal
Reserve had said it was worried about rising inflation
expectations.
On Wednesday afternoon, the Fed cut its benchmark fed
funds rate by one-quarter point to 2.0 percent, a reduction
that was in line with the market's expectations..
"It has been a traditional inverse relationship over time
that as crude and commodities weaken, people gravitate toward
the tech group, which is still out of favor," said Ned Riley,
chief executive of Riley Asset Management, in Marshfield,
Massachusetts.
Riley said that tech companies are likely to be the group
with the strongest earnings over the next year and a half,
while energy companies face a squeeze on profit margins.
The Dow Jones industrial average <> rose 131.74
points, or 1.02 percent, to 12,951.95. The Standard & Poor's
500 Index <.SPX> gained 15.92 points, or 1.15 percent, to
1,401.51. The Nasdaq Composite Index <> climbed 55.06
points, or 2.28 percent, to 2,467.86.
Stocks extended early gains after news that an index of
manufacturing was higher than expected in April, although the
sector has now contracted for three straight months.
Apple got a boost from an announcement that it would begin
selling movie downloads on its iTunes service on the same day
that the films are released in DVD form For details see
[]. Apple's stock jumped 2.4 percent to $178.07
on Nasdaq,
RIM shares climbed 4.3 percent to $126.82 on the Nasdaq.
IBM shares rose 2.4 percent to $123.59 on the New York
Stock Exchange. Shares of chip maker Intel Corp <INTC.O>,
another technology bellwether, were up 5 percent at $23.34.
Financial shares were another bright spot as investors bet
that receding inflationary pressures would boost prospects for
a further reduction in interest rates. Citigroup shares
climbed 4.2 percent to $25.98 on the NYSE.
Retailers also shot higher, with the S&P retail index
<.RLX> up 3.9 percent.
But Exxon's shares declined 4.7 percent to $88.72 on the
NYSE, making the stock the top drag on both the Dow and the
S&P 500.
(Reporting by Cal Mankowski; additional reporting by Ellis
Mnyandu; Editing by Jan Paschal)
