Stocks Lifted by O’Neill Resignation
The Dow Jones industrials’ eight-week winning streak ended Friday, although Wall Street managed a modest gain after news that President Bush had shaken up his economic team.
The announcement that Treasury Secretary Paul H. O’Neill and White House advisor Lawrence B. Lindsey had resigned lifted the market from an early slump caused by a disappointing unemployment report. Analysts said the shuffle offered hope of a fresh approach to bolstering the economy.
“The market doesn’t like O’Neill,” said Scott Wren, equity strategist for A.G. Edwards & Sons. Investors are hoping to see a replacement “who’s going to be more in tune with the global economy in terms of what makes it tick,” he said.
The Dow climbed 22.49 points, or 0.3%, to close at 8,645.77 and end five straight days of losses. The Dow plunged 121 points in early trading Friday before recovering on news of O’Neill’s resignation.
The broader market also finished higher. The Standard & Poor’s 500 index rose 5.68 points, or 0.6%, to 912.23, while the Nasdaq composite index gained 11.69 points, or 0.8%, to close at 1,422.44. Winners led losers by 3 to 2 on the New York Stock Exchange and by 8 to 7 on Nasdaq in light trading.
The Dow fell 2.8% for the week to snap its eight-week winning streak. Since hitting a multiyear low on Oct. 9, the Dow is up 18.7%, despite its recent losses. The Nasdaq dropped 3.8% for the week and the S&P; 500 lost 2.6%, ending three straight weeks of gains.
The Labor Department said the nation’s unemployment rate rose to 6% in November, matching an eight-year high set in April. The number offered a bleaker snapshot of the U.S. economy, although analysts had forecast a slight increase from the 5.7% rate in October.
Bond yields slipped on the jobs report. The yield on the benchmark 10-year Treasury note fell to 4.09% from 4.14%.
In other highlights:
* The weak economic data helped drive the dollar to its biggest loss against the euro in eight weeks as traders fretted about the strength of the U.S. recovery. In New York trading, the euro closed at $1.01, up from $1.00.
* Verizon Communications and Philip Morris, which both pay dividends of at least 3%, climbed on hopes a new Bush economic team will back more favorable tax treatment for dividends. Verizon, the largest local-phone company, added $1.12 to $40.19, while Philip Morris, the largest cigarette maker, climbed 59 cents to $39.95.
* Gold futures had their best week since late May, rising to a two-month high as a weaker dollar and recent declines for stocks increased the metal’s appeal as an alternative investment. In New York trading, gold rose $1.50 to $326.30 an ounce.
* Financial shares helped lead the market higher. Citigroup added 42 cents to $37.56. J.P. Morgan Chase added 82 cents to $24.43. Bank of America climbed 64 cents to $68.24.
* General Motors and Walt Disney led a decline in consumer-related shares after the November jobs report. GM fell 70 cents to $37.25. Disney slid 47 cents to $17.17.
* Shares of the Chicago Mercantile Exchange climbed $7.90, or 23%, to $42.90 in their first day of trading. The world’s second-busiest futures market sold 3 million shares at $35 each in its initial public stock offering.
* Carlsbad-based Isis Pharmaceuticals shares fell $1.72, or 22%, to $6.19 after an analyst lowered his rating on the stock because of concerns about a cancer drug still being tested.
