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US stocks rise, but dented by American Air bankruptcy

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American Airlines’ filing for Chapter 11 bankruptcy protection tempered upward momentum in US markets on Tuesday, with the major indexes finishing above the neutral line.

More positive predictions about Europe’s ability to solve the continent’s ongoing debt crisis and solid US consumer data were partially offset by AA’s bankruptcy and a warning on US debt.

“Stocks extended yesterday’s rally helped by positive news out of Europe and some encouraging economic data,” Scott Marcouiller of Wells Fargo said.

The troubled airline’s parent company AMR filed the bankruptcy petition early Tuesday with the aim of putting its finances in order while keeping planes in the sky and passengers in seats.

That unnerved markets as AMR’s own shares went into freefall, plunging 84 per cent by the end of trade.

But indexes held their composure, buoyed in part by a new survey released on Tuesday that showed US consumer confidence in November up sharply from the previous month, after months of decline.

“The consumer confidence index bounced back from a two-and-a-half-year low in November to 56 and experienced its largest point increase since 2003,” Marcouiller said.

The Dow Jones Industrial Average gained 0.28 per cent, or 32.62 points to reach 11,555.63 by the end of trade.

The S&P 500 was up 0.22 per cent (2.64 points) to reach 1,195.19.

The Nasdaq was down 0.47 per cent (11.83 points) to hit 2,515.51.

American Airlines’ rivals were among the major gainers.

United-Continental shares were up 6.3 per cent, US Airways were up 4.5 per cent and Delta was up five per cent.

But stock gains were also limited by US credit news.

“After the (Monday) close, Fitch lowered its US outlook to negative, but reaffirmed the AAA rating,” said David Campione of Briefing.com, while adding that the impact was limited.

“A decision was expected as the agency said it may act following the conclusion of the congressional supercommittee.”

The US bond market was weaker.

The interest rate paid on 10-year US debt rose to two per cent from 1.96 per cent on Monday.

The 30-year rate was at 2.96 per cent from 2.91 per cent seen on Monday.

Bond prices and yields move in opposite directions.