Stocks Shrug Off Warnings on Intel, Gillette
Stocks closed mostly higher in heavy trading tied to futures and options expirations, as investor optimism about interest rates and corporate earnings overcame profit warnings regarding Intel and Gillette.
At the close on Wall Street, the Dow Jones industrial average was up 13.93 points at 10,855.56.
Bonds had a tougher time, as yields edged back up after diving Thursday. The yield on the closely watched 30-year Treasury bond ended at 5.97%, up from 5.96% on Thursday.
Broader stock indicators were mostly higher Friday. The Standard & Poor’s 500 rose 2.94 points to 1,342.84, and the Nasdaq composite index rose 19.29 to 2,563.44.
So far this year, the Dow is up 18.2%, the S&P; is up 9.2% and Nasdaq has gained 16.9%. For the week, the Dow added 3.5%, the third-biggest weekly gain so far this year. The Nasdaq, Dow and S&P; all more than recovered from last week’s declines.
Friday’s gains were limited as Intel and Gillette dropped on concern about earnings.
Intel, the world’s largest maker of chips for personal computers, fell $3.06 to $54.94 after Morgan Stanley Dean Witter cut its rating on the stock because of delays in launching a new chip for laptop computers. But other computer and semiconductor shares held their ground.
Software stocks got a boost from Adobe Systems, which rose $8.69 to $82.56 after the maker of graphics software used by magazines and newspapers topped earnings forecasts.
Gillette fell after the razor and blade maker warned that second-quarter profit will miss analysts’ forecasts for the rest of this year because of weak sales outside the United States. Gillette tumbled $5.13 to $42.19.
The dampened earnings outlook for the two big companies came a day after Federal Reserve Chairman Alan Greenspan indicated that only a modest interest rate hike may be needed to keep inflation well-tamed. His comments had a generally soothing effect on the markets.
Despite the news on Gillette and Intel, market watchers remain optimistic about second-quarter earnings reports, which will be released next month.
“We are going to see some pleasant surprises, and that will be the norm, not the exception,” said Arthur Hogan, chief market analyst at Jefferies & Co.
Advancing issues outnumbered decliners by a narrow margin on the New York Stock Exchange.
The NYSE composite index rose 0.48 point to 636.55, and the American Stock Exchange composite fell 0.12 point to 768.57. The Russell 2,000 index, comprising small-company stocks, rose 1.67 points to 445.05.
The Wilshire Associates Equity Index--the market value of NYSE, American and Nasdaq issues--was 12,268.574, up 27.863 points, or 0.23%.
Overseas, Japan’s Nikkei stock average fell 0.22%, Germany’s DAX index rose 0.34%, Britain’s FTSE-100 was up 1.30%, and France’s CAC-40 was up 0.68%.
Among Friday’s highlights:
* IBM rose 69 cents to $120.88. Morgan Stanley Dean Witter raised its price target to $135 per share from $115.
* Aetna fell $2.94 to $93.56. Salomon Smith Barney cut its target price on the stock to $106 from $114, citing a trend of steeper losses at soon-to-be-acquired unit Prudential Healthcare.
* CNet rose $2.31 to $51.69. Goldman Sachs issued an upbeat view of the Internet and media network company.
* AutoCyte rose $1.19, or 22%, to $6.69 after the company that makes systems for cervical cancer screenings said the Food and Drug Administration approved its Prep Pap smear test.
* Fossil rose $1.84 to $46.19. The maker of fashion watches and accessories will replace Mariner Post-Acute Network in the Standard & Poor’s SmallCap 600 index after the close of trading.
* Pacific Sunwear of California gained $2.50, or 7.7%, to $35.13. The retailer of casual clothing was reiterated “outperform” by analyst David Turner at Ferris Baker Watts. He said Pacific Sunwear officials told him the company will continue to perform well, despite the announcement from rival Wet Seal of weak sales in California.
