Stocks Rally as Investors Plan for Year’s End
Stocks resumed their December rally Wednesday as some investors looked past higher oil prices and focused instead on building up their portfolios before year’s end.
Traders were encouraged as the dollar surged against the yen, the euro and other currencies. Economists had been concerned that the weak dollar could lead to a drop in foreign investment in U.S. markets.
But Wall Street got its biggest boost from money managers hoping to ride a rally into the final weeks of the year, some analysts said.
Despite a bout of profit taking Monday and Tuesday, “there’s just a ton of money coming into the market, and some of the usual year-end shuffling, and it’s ignoring the day-to-day ups and downs on oil and everything else,” said Matt Kelmon, portfolio manager of Kelmoore Strategy Funds.
“I think the pullback we had over the past few days is good because it’ll help us move higher before the year’s out,” he said.
The Dow Jones industrial average rose 53.65 points, or 0.5%, to 10,494.23, recouping some of the 151 points lost over the previous two sessions.
Broader stock indicators also were moderately higher. The Standard & Poor’s 500 index was up 5.74 points, or 0.5%, to 1,182.81 and the Nasdaq composite gained 11.45 points, or 0.5%, to 2,126.11.
Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange.
A barrel of light crude oil closed at $41.94, up 48 cents, in New York trading. The uptick, however, came after oil hit a four-month low Tuesday.
Analysts said pent-up investor demand should push stocks up before the end of the year, so long as oil prices stayed relatively low and the mood about the economy remained upbeat.
“I’ve been saying for the past half a year that things would pick up after the election, and they did. I still think that works, even with what we’ve seen this week,” said Brian Bruce, director of global investments at PanAgora Asset Management in Boston.
Among Wednesday’s market highlights:
* General Electric, a Dow component, climbed 40 cents to $35.71 after analysts at Lehman Bros. upgraded the stock to “overweight” from “equal-weight,” citing the potential for double-digit earnings growth in 2005.
Another industrial name, turf maintenance equipment maker Toro, surged $4.78 to $77.48 after reporting strong quarterly earnings and boosting its 2005 outlook.
* Merck made strong gains despite a disappointing earnings forecast. The drug maker warned that its 2005 profit would be lower than analysts expected because of the withdrawal of its Vioxx arthritis drug from the market this year. However, the forecast could have been worse, analysts said, and Merck rose 80 cents to $28.69.
Pfizer, meanwhile, added 30 cents to $27.50 after saying sales of its cholesterol-lowering drug Lipitor might rise 15% in each of the next five or six years.
* Johnson & Johnson climbed 74 cents to $61.15. A day earlier, the shares fell $1.42 on a New York Times report that the biggest maker of medical devices might buy defibrillator maker Guidant for $24 billion. Guidant gained $1.40 to $73.75. The market for pacemakers and implantable defibrillators, which correct irregular heartbeats, may grow more than 24% this year to $4.7 billion, analysts estimate.
* Shares of San Jose-based Xilinx slumped $2.36 to $28.37 in extended trading after the world’s biggest maker of programmable semiconductors cut its fiscal third-quarter sales forecast. The stock had ended the regular session at $30.73, down 52 cents. Sales will fall 5% to 8% from the second quarter, the company said.
Altera, Xilinx’s smaller rival, tumbled $1.80 to $20.40 in the after-hours market. It was down 44 cents to $22.20 during the regular session. Altera said fourth-quarter sales would fall as much as 12% from the previous quarter.
Among other computer chip makers, Texas Instruments sank 97 cents to $24.05, National Semiconductor dropped 56 cents to $16 and Intel lost 47 cents to $23.01.
* Unisys lost $1.08 to $10.32 for the second-steepest drop in the S&P; 500. The company, which sells server computers, said it would not meet analysts’ earnings estimates because of slow growth in technology spending.
* Gold mining shares fell as the dollar’s rebound sent prices of the precious metal falling. Newmont Mining, the No. 1 gold producer, lost 55 cents to $44.76. Barrick Gold, the third biggest, retreated 49 cents to $23.09.
