Stocks Finish Week Strong
Technology and drug stocks powered a late rally Friday, sending indexes to their third straight winning week and feeding hopes for a lasting market turnaround.
“There’s a lot of money still on the sidelines, and I think we could get a sustained rally for the end of the year. That’s what people are talking about,” trading chief Todd Leone of S.G. Cowen told Reuters.
Bulls believe some of the $2.2 trillion stashed in safe but low-yielding money market funds might help fuel the budding stock rally -- if investors gain confidence that equities won’t falter yet again, prolonging the 2 1/2-year-old bear market.
Stocks plunged to five-year lows Oct. 9, but now the market is nearing its seasonal sweet spot: Historically, November through January has been the most lucrative span, according to the Stock Trader’s Almanac.
In Friday’s trading, the Dow Jones industrial average rose 126.65 points, or 1.5%, to 8,443.99; the Standard & Poor’s 500 index climbed 15.15 points, or 1.7%, to 897.65; and the tech-laced Nasdaq composite surged 32.42 points, or 2.5%, to 1,331.13, as all three indexes widened their gains late in the session.
Winners topped losers by 2 to 1 on the New York Stock Exchange and by more than 3 to 2 on Nasdaq, although volume was modest.
For the week, the Dow and the S&P; 500 added 1.5%, while the Nasdaq composite rose 3.4%. Since Oct. 9, the Dow has risen about 16%.
Despite Friday’s stock rally, Treasury yields dropped for the third day in a row as reports showed durable-goods orders and consumer confidence fell more than expected in recent surveys, adding to evidence that an economic rebound is slackening. The yield on the benchmark 10-year T-note eased to 4.09% from 4.12% on Thursday.
In the tech stock sector, Costa Mesa-based Emulex surged $4.08 to $17.88 after the maker of computer circuit cards raised profit forecasts for its fiscal second quarter. Analysts at Deutsche Bank Securities and Morgan Keegan upgraded the stock, which has sunk from a peak of $112.75 in March 2000.
Among major tech names, Microsoft added $1.45 to $52.68, IBM gained $2.46 to $74.56, Hewlett-Packard climbed 82 cents to $14.62 and Intel rose 96 cents to $16.59.
In the pharmaceutical industry, Schering-Plough and Wyeth advanced after Lehman Bros. raised its rating on the stocks, calling them undervalued relative to prospects for profit growth. Schering-Plough rose $1.23 to $20.35 and Wyeth gained $1.24 to $34.50. Elsewhere in the sector, Pfizer added $1.33 to $31.90 and Merck climbed $2.42 to $52.91.
But health insurer Cigna reminded investors that corporate earnings remain a decidedly mixed bag:
After slashing profit estimates for this year and next, the company saw its shares plummet $24.21 to $39.39 -- a 38% drop.
In commodity trading, crude oil fell $1.15 to $27.05 a barrel in New York as talks at the United Nations eased fears of a U.S.-Iraq war. Expectations that U.S. inventories will swell also depressed prices.
Among oil-related stocks, Noble sank $3.61 to $31.45 and Amerada Hess slumped $5.63 to $52.14 as brokerages downgraded those shares.
In other highlights:
* American Electric Power soared $2.78 to $24.65 after the utility giant said profit rose slightly as increased electricity sales overcame an energy-trading slump.
* Starbucks rose $1.48 to $23.93 after the coffee chain raised its estimate for full-year earnings to 54 cents a share from 53 cents.
* Household International gained $1.26 to $24.09 after the consumer finance company raised $900 million in two securities offerings.
