Stocks Rise on Positive News About Ports
Stocks advanced Tuesday as investors cheered federal action on the West Coast port lockout and solid earnings from companies such as soft-drink giant PepsiCo. But the market gave up big early gains.
Stocks rose after President Bush said he would ask a court to force the reopening of West Coast ports after a 10-day lockout that has cost billions of dollars and stunted international trade.
“Any progress that they can make to solve the strike [lockout] will be very positive for the marketplace,” said Bob Basel, a trader at Salomon Smith Barney.
After U.S. markets closed, a federal judge approved Bush’s request to reopen the ports.
Major stock gauges have tumbled to multiyear lows in recent days on fears of a possible war with Iraq and concerns about the economy and corporate profits. These worries linger, but traders said some unexpectedly positive earnings forecasts and the prospect of a quick resolution to the shipping impasse drove the day’s gains.
The Dow Jones industrial average, which closed Monday at its lowest point since October 1997, rose 78.65 points, or 1.1%, to 7,501.49.
That broke a four-session losing streak, although the Dow failed to hold an early 199-point gain.
The Standard & Poor’s 500 index climbed 13.27 points, or 1.7%, to 798.55. The technology-laden Nasdaq composite index, which closed Monday at levels last seen in August 1996, added 9.81 points, or 0.9%, to 1,129.21.
Despite the gains in major indexes, losers outnumbered winners by 17 to 15 on the New York Stock Exchange and by 17 to 16 on Nasdaq. Trading was heavy, with NYSE volume at its highest level since July.
Leading clothing retailers, considered to be among the most vulnerable to the West Coast port dispute, rallied, some rising as much as 9%. Gap added 75 cents to $9.59, Limited Brands jumped $1.01 to $13.91 and Abercrombie & Fitch climbed $1.48 to $17.40.
Wal-Mart Stores, the world’s biggest retailer, gained $2.25 to $52.60, and Home Depot, the largest home improvement store chain, advanced $1.04 to $25.25, rebounding from sharp losses Monday.
Investors still are on edge as third-quarter earnings trickle in this week, heightening tensions in a market troubled by the slow pace of corporate profit growth.
PepsiCo jumped $5.32, or 15%, to $41.10 after the company said its third-quarter profit rose as most of the food and soft-drink company’s units posted gains in sales and profits. Rival Coca-Cola, the world’s No. 1 soft-drink company, rose $1.99 to $52.12.
Among other highlights:
* Gold stocks lost ground as major market indexes climbed and investors yanked cash out of so-called safe havens. Gold fell $3.70 to $318.20 an ounce in New York trading. The Amex index of gold-mining stocks tumbled 4%, led by Goldcorp, down 44 cents to $9.57, and Echo Bay Mines, off 10 cents to 90 cents.
* Pfizer, the biggest drug maker, advanced $1.40 to $29.70 and Merck gained $1.87 to $46 after Stewart Adkins, an analyst at Lehman Bros., said U.S. drug stocks are “very, very cheap.” He boosted his rating on the industry by two steps, to “positive” from “negative,” citing optimism that industry profit growth will resurge in 2003.
* Utilities were the biggest drag on the S&P; 500 as TXU plunged again on concern about the company’s finances. TXU shares fell $5.46, or 24%, to $17.18. The Dow Jones utilities average dropped nearly 6% to 185.39, with all but one of the 15 members declining.
Also in the sector, Dominion Resources tumbled $5.91 to $41.84, American Electric Power lost $1.60 to $22.91 and Edison International was off 61 cents to $9.21.
* Among Southland issues, 99 Cents Only Stores gained $2.84 to $23.15 after the company said total sales jumped 22.6% in the third quarter. The firm reiterated that it expects annual growth of 25%.
* Shares of Lockheed Martin, Northrop Grumman and other military suppliers fell after President Bush said war with Iraq would be a last resort. Lockheed Martin dropped $3.34 to $58.10 and Northrop Grumman slid $6.70 to $114.70.
Market Roundup, C8-9
