Falling oil offsets weak techs; Apple drags : US Business

By Walter Brandimarte

NEW YORK (Reuters) - The Dow edged up on Tuesday as a drop of about $4.50 in oil prices added to positive sentiment from Caterpillar's strong earnings, offsetting declines in tech shares, including Apple.

U.S. front-month crude declined about 3.5 percent, to $126.52 a barrel on the New York Mercantile Exchange as the U.S. dollar rose and supply concerns caused by Tropical Storm Dolly abated.

The oil drop was a welcome boost in a market that had plenty of disappointing news, including a steeper-than-expected profit decline at credit card company American Express

Shares of Apple , maker of the iPod and iPhone, were the top drag on both the Nasdaq and the S&P 500, after the company said late on Monday its current-quarter earnings will be well below Wall Street's targets.

The drop in oil eased worries about the impact of higher energy costs on consumers and businesses, pushing up consumer stocks like Coca-Cola and Wal-Mart , which helped lift the Dow.

"You see crude oil down, and I think that's a stimulus to the broad stock market. You also see the dollar up," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

"Those two components, I think, are key going forward, at least in the current environment. A stronger dollar should cap oil prices and continue to push them down."

The Dow Jones industrial average <.DJI> rose 31.84 points, or 0.28 percent, at 11,499.18. The Standard & Poor's 500 Index <.SPX> was up 0.12 point, or 0.01 percent, at 1,260.12. The Nasdaq Composite Index <.IXIC> slipped 4.72 points, or 0.21 percent, at 2,274.81.

Coca-Cola shares gained 3.6 percent to $51.39 on the New York Stock Exchange while Wal-Mart rose 2.9 percent to $58.95.

Caterpillar shares rose about 1 percent to $73.88 after the maker of heavy construction equipment posted a stronger-than-expected quarterly profit.

Profit at chemical maker DuPont also beat estimates, sending the stock up more than 2 percent to $44.99.

Shares of General Electric Co rose more than 2 percent at $28.36 after the conglomerate and Abu Dhabi investment agency Mubadala Development Co said they had entered into an $8 billion joint venture.

Shares of Wachovia initially dropped more than 10 percent after the fourth-largest U.S. bank said it would slash its dividend, but shares rebounded when the company said it did not plan to sell new shares to raise capital. Wachovia rose more than 7 percent to $14.10.

(Editing by Kenneth Barry)

(c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.