By Kristina Cooke
NEW YORK (Reuters) - Stocks rose on Tuesday, after embattled automaker GM
The modest advance gave stocks a positive start on the first day of the third quarter, following Monday's session, when the Dow Jones industrial average finished its worst first six months since 1970.
Financial shares, which had earlier led decliners in the S&P 500, turned higher in afternoon trading. UBS upgraded credit card companies American Express
But concerns about inflation continued to weigh on the market. U.S. crude oil futures
"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 <.DJI> rose 32.25 points, or 0.28 percent, to 11,382.26, again avoiding closing in bear market territory.
The Standard & Poor's 500 Index <.SPX> gained 4.91 points, or 0.38 percent, to 1,284.91. The Nasdaq Composite Index <.IXIC> advanced 11.99 points, or 0.52 percent, to 2,304.97.
GM's stock ended at $11.75, up 2.2 percent on the New York Stock Exchange. Immediately after the company released its sales for June, GM's stock had jumped more than 10 percent.
But GM's positive surprise was the exception, not the rule. Ford Motor Co
A report by the Institute for Supply Management 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.
Among financial shares, Lehman Brothers
American Express shares rose 6.2 percent to $40.02 and were the top contributor to the Dow's gains. Capital One Financial shares rose 5.6 percent to $40.14 and Discover Financial shares gained 6.3 percent to $14.
An index of S&P financial stocks <.GSPF> rose 1 percent.
Shares of commercial lender CIT Group Inc
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.
Trading was moderate on the New York Stock Exchange, with about 1.64 billion shares changing hands, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq, about 2.65 billion shares traded, well above last year's daily average of 2.17 billion.
Despite stocks' moderate gains on Tuesday, the market's breadth was negative. Declining stocks outnumbered advancing ones by a ratio of about 3 to 2 on both the NYSE and the Nasdaq.
(Editing by Jan Paschal)