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US STOCKS-Energy lifts Wall St but caution keeps volume low

Published 03/29/2011, 04:37 PM
Updated 03/29/2011, 04:40 PM
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* Trading volume remains low near quarter close

* Home Depot rallies on stock-buyback program

* Consumer confidence, home prices fall

* Dow up 0.7 pct, S&P up 0.7 pct, Nasdaq up 1 pct (Updates to close, changes byline)

By Rodrigo Campos

NEW YORK, March 29 (Reuters) - Strength in energy lifted U.S. stocks on Tuesday as investors concentrated on adding to winning positions as the quarter winds down, but uncertainty kept trading volume light.

About 6.2 billion shares traded in composite volume on the New York Stock Exchange, NYSE Amex and Nasdaq, the second-weakest of 2011 and far below last year's estimated daily average of 8.47 billion.

Conviction has been weak as investors assess the effect of Japan's earthquake and turmoil in the Middle East on corporate results.

"I don't think a lot of people know what to do. They hear about how bullish it is to reconstruct Japan but until the disaster is quantified, they are not going to do anything," said Shawn Hackett, president of Hackett Advisors in Boynton Beach, Florida.

"When the market doesn't know what to do, it tends to go up on low volume and down on higher volume because when people get nervous, they sell."

Oil services stocks rose for a fifth session as investors continued to add to a sector sitting at its highest since August 2008. The PHLX oil services sector index rose 1.9 percent.

"Until the oil market cracks, momentum traders are buying the oil services stocks because that's what's working," Hackett said. "Until crude breaks the $100 level back down, you're going to continue to see a strong bid on oil service stocks."

All 10 of the S&P 500's major sectors rose, with energy up 1 percent.

Oil rig contractor Rowan Cos Inc is bidding on 11 drilling opportunities in Saudi Arabia, its chief executive told Reuters, and its shares jumped 5.2 percent to $43.46.

Oil prices have traded near multi-month highs recently, underpinned by weeks of unrest in Libya and in oil-exporting countries in the Middle East. U.S. crude settled up 0.8 percent near $105 per barrel.

Volume was also weakened ahead of data on the labor front, including the ADP private-sector employment report on Wednesday and the U.S. government's key non-farm payrolls report on Friday.

The Dow Jones industrial average gained 81.13 points, or 0.67 percent, to 12,279.01. The Standard & Poor's 500 rose 9.25 points, or 0.71 percent, to 1,319.44. The Nasdaq Composite added 26.21 points, or 0.96 percent, to 2,756.89.

The S&P 500 index has risen 4.9 percent in the first three months of the year, which would be its seventh positive quarter in the last eight.

Home Depot Inc, up 2.9 percent at $37.70, was the Dow's best performer after the home improvement retailer said it would buy back $1 billion of outstanding shares through an accelerated program.

Amazon.com Inc rose 3.1 percent to $174.62 after it introduced a service offering remote access to music, ahead of rivals Apple Inc and Google Inc.

Cisco Systems gained 1.8 percent to $17.44 after it said it plans to buy software company newScale Inc for an undisclosed amount to boost its cloud computing services.

Investors shrugged off economic data that showed U.S. consumer confidence fell in March as households worried about inflation, while home prices dropped for the seventh straight month in January.

Lennar Corp, the third-largest U.S. homebuilder, fell 3.4 percent to $19.07 after reporting a drop in revenue.

Advancing stocks outnumbered declining ones on both the NYSE and Nasdaq by a ratio of more than 2 to 1. (Reporting by Rodrigo Campos; Editing by Jan Paschal)

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