Carmaker’s Outlook Helps Boost Stocks
Investors looked past a jump in oil prices Friday, sending stocks higher on the strength of Ford Motor’s upbeat profit outlook. The major indexes finished the week mixed.
Ford’s outlook was somewhat of a surprise because the automaker announced cutbacks in production this month. A number of large companies, especially in the technology and industrial sectors, have downgraded their earnings guidance for the third quarter because of soft demand, renewing worries on Wall Street that the economic slowdown would continue.
Wall Street managed to hold on to its gains despite oil prices rising back above $45 a barrel, driven by lost capacity from the Gulf of Mexico in the wake of Hurricane Ivan. A barrel of light crude settled at $45.59, up $1.71.
“Considering how high oil has gotten, the market is acting pretty strong,” said Todd Leone, managing director of equity trading at SG Cowen Securities.
The Dow Jones industrial average rose 39.97 points, or 0.4%, to 10,284.46.
Broader stock indicators also were modestly higher. The Standard & Poor’s 500 index was up 5.05 points, or 0.4%, at 1,128.55, and the Nasdaq composite index gained 6.01 points, or 0.3%, to 1,910.09.
But advancing issues just narrowly outnumbered decliners on the Big Board. The quarterly expiration of stock index options and futures contracts helped boost trading.
For the week, the Dow fell 0.3%, reversing five weeks of gains, while the S&P; 500 was up 0.4% and Nasdaq rose 0.8%. It was the sixth straight positive week for the S&P; 500 and the second up week for Nasdaq.
Some investors probably kept to the sidelines in advance of Tuesday’s Federal Reserve meeting, where the Fed is expected to raise its key short-term interest rate by a quarter percentage point to 1.75%.
The latest reading of the University of Michigan’s consumer sentiment index gave investors another conflicting reading on the state of the economy. The index fell slightly to 95.8 in September, down from 95.9 in August, suggesting that consumers’ worry level is higher.
Wall Street had forecast a 96.7 reading, but some bond traders had expected the index to fall below the 95.8 actually measured. As a result, bond demand weakened and yields rose from Thursday’s five-month lows.
The yield on the 10-year U.S. Treasury note climbed to 4.11% from 4.07% on Thursday.
In other market highlights:
* Ford added 27 cents to $14.22 after saying its third-quarter and full-year earnings would be higher than expected because of improved cost efficiency and strong results from its financial services business.
Among other industrial issues, Caterpillar gained $1.28 to $76.12, Illinois Tool Works rose $1.01 to $92 and Nucor jumped $1.57 to $89.67.
* An index of oil and gas producers surged 1.7% as crude prices rose. BP gained $1.31 to $56.43, Noble, which drills for oil and natural gas, rallied $1.14 to $44.68, and Amerada Hess jumped $1.97 to $83.99.
* Texas Instruments advanced 49 cents to $22.08, a day after saying it would increase its dividend for the first time in nine years and buy back $1 billion of its shares.
* Qualcomm slid $1.57 to $38.83 even as the company raised its fourth-quarter and full-year profit estimates because of strong sales. However, Qualcomm said it might have to adjust the way it accounts for royalties, which could result in lower future revenue figures.
* Tektronix, a maker of testing equipment used by computer and semiconductor makers, jumped $2.44 to $33.25. Late Thursday, the company reported a fiscal first-quarter profit of 43 cents a share -- trouncing the 30 cents expected by analysts.
