US stocks rise as upgrades offset inflation worry

NEW YORK, June 14 (Reuters) U.S. stocks rose on Wednesday as brokerage upgrades of companies in the semiconductor, home-builder and aerospace sectors offset concerns sparked by a report showing higher-than-expected inflation in May.

The gains put the Dow Jones industrial average at break-even for the year after weeks of selling pushed stocks lower, including an 0.8 percent loss by the Dow on Tuesday over worries about a global rise in interest rates.

Intel Corp. and other chip makers gave a boost to the Nasdaq after Goldman Sachs upgraded its rating on four companies, MarketWatch reported on its Web site.

Shares in Boeing Co. jumped 5 percent to .86, leading the blue-chip Dow. Goldman Sachs upgraded shares in the plane manufacturer, while Boeing archrival EADS plunged in Europe after it said its Airbus A380 superjumbo would be delayed.

The Labor Department's Consumer Price Index, excluding food and energy, rose 0.3 percent compared with Wall Street's expectations for a 0.2 percent gain, cementing expectations the Federal Reserve will raise U.S. rates in June.

''There have been bits and pieces of good news,'' said John Caldwell, chief investment strategist at McDonald Financial Group.

''The fact that core CPI was one-tenth of a percentage point above consensus maybe doesn't scare investors too bad.'' The Dow Jones industrial average was up 37.46 points, or 0.35 percent, at 10,743.60. The Standard&Poor's 500 Index was down 5.63 points, or 0.45 percent, at 1,252.30. The Nasdaq Composite Index was up 7.28 points, or 0.35 percent, at 2,079.75.

U.S. stocks tumbled on Tuesday, pushing the Dow into negative territory for the year, amid inflation fears. The Nasdaq finished down for the eighth day in a row, matching a losing streak it registered in May which was its longest in 12 years.

The Fed's policy-making committee will meet on June 28-29 and is expected to raise the benchmark fed funds rate, now at 5 percent, for a 17th consecutive time.

Goldman Sachs raised Intel, Advanced Micro Devices, SanDisk Corp.

and Applied Materials Inc..

Shares in Intel rose 3.1 percent to .66 and AMD gained 2.3 percent to . SanDisk advanced 2.2 percent to .04, while Applied Materials climbed 1.5 percent to .37.

Home builders Toll Brothers Inc. and M.D.C. Holdings Inc. rose after Citigroup raised its price target on some of the companies in the group, saying it expected home-building stocks to rebound earlier than investors thought. ID:nN14193707 Toll Brothers rose 0.2 percent to .57 and MDC rose 1.1 percent to .86.

REUTERS CS BD2001