Major Indexes Rise After GE Issues Upbeat Forecast
Stocks rose Wednesday after four straight losing sessions as a promising forecast from General Electric lured investors back after concerns that the dollar’s recent slide would hurt U.S. investments.
Stock prices dipped this week as investors fretted about threats of attacks from Al Qaeda, the dollar’s slump and stock prices running ahead of economic and corporate outlooks.
The selling stopped Wednesday when the major share indexes dipped below their 50-day moving averages, traders said, indicating that investors believe the upward trend that has characterized the market for most of this year is not yet exhausted.
“We’ve seen the market consolidate over the last four trading days. The market has been very defensive,” Michael Palazzi, managing director of equity trading at SG Cowen Securities, told Associated Press. “What kicked it out of the trend was one, a slightly oversold condition, and two, the announcement by General Electric saying the economy will pick up. It’s definitely a market leader.”
The Dow Jones industrial average closed up 66.30 points, or 0.7%, at 9,690.46; the Standard & Poor’s 500 index rose 8.29 points, or 0.8%, to 1,042.44; and the Nasdaq composite index added 17.90 points, or 2%, to 1,899.65.
Winners led losers by 3 to 2 in moderate trading on the New York Stock Exchange and by 7 to 5 on Nasdaq, where trading volume was heavier.
Early in the session, the dollar sank to a record low against the euro at $1.198 after the U.S. move to place quotas on Chinese textile imports. Investors, already worried the stock market had run too far and too fast this year, are concerned that the weakening dollar could scare foreign investors out of U.S. assets, and a falling dollar played a key role in Tuesday’s market losses.
The dollar rebounded by day’s end Wednesday, with the euro closing at $1.189. The greenback also closed higher against the yen.
GE rose $1.03 to $29.47, leading the Dow higher and ranking as the most active stock on the NYSE for the second day in a row. The firm said it expected only a modest rise in profit next year but a return to double-digit growth in 2005. GE also plans to split off most of its life and mortgage insurance operations in an initial public offering next year that’s expected to be one of the biggest IPOs in a while.
Also boosting stocks was a Commerce Department report that housing starts in October reached the highest level in almost 18 years. Consumer purchases of homes, automobiles and clothing helped the economy expand at a 7.2% annual rate in the third quarter, the fastest in almost two decades.
Long-term bond yields rose for the first day in six on the housing report. The yield on the benchmark 10-year Treasury note climbed to 4.24% from Tuesday’s close of 4.14%.
In commodities trading, oil prices eased on profit taking after jumping almost 5% on Tuesday. Oil for December delivery fell 36 cents a barrel to $32.92 in New York trading. Gold, which crossed the $400-an-ounce mark in overnight electronic trading, also ended lower, closing at $394.90, down $2.70 an ounce.
In other highlights:
* Analog Devices, which makes chips used in cellphones and various electronics, jumped $1.70 to $46.59. The company said quarterly net profit more than doubled on strong orders worldwide, which it also expects in the current quarter.
* Network storage maker Network Appliance was the biggest loser in the S&P; 500, falling $2.16 to $21.27 a day after the company reported disappointing quarterly results.
* UnitedHealth, the biggest U.S. health insurer, rose $2.48 to $51.58. The company lifted its earnings forecast for next year because of improving operating margins and increased revenue from acquisitions.
* Sirius Satellite Radio lost 12 cents to $2.11. It was the second-most active stock, with almost 81 million shares traded. The No. 2 U.S. satellite-radio company is selling 73 million shares and will use the proceeds for general purposes.