Another Winning Week on Wall St.
Momentum from Wall Street’s continuing rally helped stocks preserve their recent gains Friday and gave the major market indexes their second straight winning week -- the first such streak in two months.
The gain was surprising given stocks’ recent big ride, which sent the Dow Jones industrials soaring more than 1,000 points since hitting a five-year low Oct. 9. Analysts expected the market to give up more ground.
“We have gone from being extremely oversold to very overbought. It is due for a rest,” said Brian Bush, director of equity research at Stephens Inc.
The Dow closed up 47.36 points, or 0.6%, at 8,322.40 after having fallen as much as 127 points early on. In the last seven sessions, the Dow has climbed 1,036 points. The Nasdaq composite index rose 15.57 points, or 1.2%, to 1,287.86. The Standard & Poor’s 500 index advanced 5.19 points, or 0.6%, to 884.39.
Winners and losers were about even on the New York Stock Exchange and Nasdaq amid weak trading volume.
All three indexes had their second consecutive winning week, something they last accomplished in the two weeks that ended Aug. 24. The Dow finished the week up 6%, while Nasdaq rose 6.4% and the S&P; 500 climbed 5.9%.
Traders and investors said the stock market rally has been underpinned by evidence that third-quarter corporate earnings were better than expected. More than 60% of the S&P; 500 companies that have reported quarterly results so far have beaten analysts’ estimates, according to Thomson First Call.
“What we have finally begun to see is a strong, positive shift in earnings,” Diane Garnick, global investment strategist at State Street Global Advisors, told Bloomberg News. “The change from an earnings depression to a slight earnings recovery is making it much more optimistic for equities.”
On Friday, Microsoft rose $2.38 to $53.15, having announced earnings late Thursday that were 7 cents a share higher than analysts’ estimates. Avon jumped $3.60 to $49.79 on third-quarter earnings that beat expectations by a penny a share. And Merck advanced 28 cents to $51.03 after meeting expectations and reaffirming its 2002 forecast calling for flat results.
But the advance was curbed by profit taking. Shares of companies that posted better-than-expected earnings results this week, such as General Motors and Johnson & Johnson, fell as investors cashed in some gains. GM fell $1.09 to $34.31, while J&J; declined 85 cents to $59.35.
Treasury yields fell as investors took advantage of rates that had risen to seven-week highs. The benchmark 10-year Treasury note yield slid to 4.11% from Thursday’s close of 4.20%. Still, the 10-year T-note yield had its biggest weekly surge since March as the S&P; 500 climbed.
“We’ve had over a 100-point rally in the S&P;, and that’s gotten the bond market’s attention,” said Gary Pzegeo, a fixed-income manager at Gannett Welsh & Kotler. “What we’ve seen in the market is an indication of change in sentiment” and a flight from bonds.
The dollar had its sixth weekly gain in seven against the yen on signs the U.S. economic recovery is boosting corporate profits. The greenback also had its third weekly advance in four against the euro.
“The U.S. will show itself to be the best place to invest,” said Jeremy Fand, a strategist at Friedberg Mercantile Group. “The dollar’s going to get stronger.”
Market Roundup, C4-5
