Week in Review
Stock Indexes End Week on High Note
Stocks rocketed at the end of the week, lifting blue-chip indexes to their highest levels in almost four years, as investors reacted to job growth data that were solid enough to signal economic strength but not so robust as to stoke inflation fears.
For the week, the Dow Jones industrial average gained 0.9% to 10,940.55. The Standard & Poor’s 500 index also rose 0.9%, to 1,222.12, and Nasdaq rose 0.3% to 2,070.61.
Small stocks took part in the broad advance, as the Russell 2,000 index neared its all-time peak reached in late December. And the Dow Jones transportation average hit a record high.
In Friday’s bond trading, yields plunged as inflation jitters eased. The yield on the benchmark 10-year Treasury note dropped to 4.31% from 4.38% on Thursday.
*
New MS Drug Pulled After Patient Dies
The makers of a promising new drug for multiple sclerosis abruptly pulled it off the market after one patient died of a rare central nervous system disorder.
Biogen Idec Inc. and Elan Corp. described the withdrawal of Tysabri as a “suspension” and said they would try to get the drug back on the market.
The Food and Drug Administration said it continued to believe that the drug “offers great hope to MS patients.”
Biogen and Elan said they were in the process of wrapping up a two-year clinical study last month when they learned that a patient had developed progressive multifocal leukoencephalopathy, or PML, a condition caused by a virus that destroys the myelin sheath that protects nerve fibers.
Shares of Biogen Idec and Elan tumbled.
*
Federated to Buy Rival May for $11 Billion
Ending weeks of speculation, Federated Department Stores Inc. agreed to buy May Department Stores Co. for $11 billion.
The parent of Macy’s and Bloomingdale’s, sources said, would pay $36 a share to add an assortment of stores, including those of Robinsons-May -- a name that might disappear.
The marriage of Federated and May would be felt by malls, clothing makers and media outlets that carry their advertising. The effects would be significant in Southern California, where 28 malls are anchored by stores owned by both Federated and May and where vendors sew clothes for both chains. The deal would create a company with nearly 1,000 locations and annual revenue of $30 billion.
*
Martha Stewart Heads Home From Prison
Lifestyle entrepreneur Martha Stewart was released from a federal women’s prison in Alderson, W.Va., after serving a five-month sentence for lying to regulators about a 2001 stock sale.
Her company, Martha Stewart Living Omnimedia Inc., was hit hard as Stewart endured a trial and criminal conviction last year. It lost more than $60 million in 2004 as circulation and ad revenue sank at Stewart’s namesake magazine. It has notified Wall Street that first-quarter 2005 numbers will be poor. But shares have risen 17% this year.
Stewart will be under house arrest for five months at her estate in Bedford, N.Y.
“I see tremendous opportunity in front of us,” Susan Lyne, chief executive of Martha Stewart Living Omnimedia, said in a conference call with analysts.
*
ChoicePoint Had Earlier Breach of Database
Two scammers penetrated ChoicePoint Inc.’s vast online database of personal records five years ago in an operation similar to a more recent case that has triggered a national furor over privacy, court records show.
The Nigerian-born fraud artists were arrested in Los Angeles in 2002 by federal officials who charged that the pair had used ChoicePoint to gain access to confidential information about at least 7,000 people and possibly many more, resulting in at least $1 million in losses.
That security breach is similar to the case in which a North Hollywood man, also a Nigerian native, pleaded no contest last month to felony identity theft. He had obtained as many as 145,000 ChoicePoint records.
The company said federal regulators were investigating how the identity theft accessed records and why two executives sold nearly $17 million of stock before the case became public.
*
U.S. Economy Adds a Net 262,000 Jobs
The economy generated 262,000 new jobs in February, one of its best showings of the Bush administration but not enough to make room for all the new job seekers, the government reported. The unemployment rate edged up to 5.4% from 5.2%.
“It indicates that times are better for the average American worker,” said Mark Zandi, chief economist at Economy.com.
The number of new jobs, in a short month marked by stormy weather on both coasts, was the greatest since October and marked only the fourth time since President Bush took office that the economy gained as many as 250,000 jobs.
The average workweek for nonsupervisory personnel, at 33.7 hours, remained unchanged from January. The average weekly earnings of nonsupervisory workers held constant at $535.83 -- a sign, Zandi said, that they still lack negotiating power with their bosses.
*
Chiron Receives OK to Make Flu Vaccine
British health authorities cleared the way for Chiron Corp. to resume flu vaccine production, ending a five-month suspension that created temporary shortages in the United States last fall.
The factory in Liverpool, England, faces other regulatory hurdles, but analysts on Wall Street said they expected Chiron to provide shots in the United States this year, easing worries about another season of scarcity.
Emeryville, Calif.-based Chiron said it started producing vaccine as soon as the suspension ended in Britain.
Chief Executive Howard Pien said the company remained focused on resolving outstanding problems at the Liverpool plant. Chiron must provide weekly progress reports to British regulators, and the U.S. Food and Drug Administration must sign off on plant improvements.
*
Ebbers Says He Knew Little of Accounting
Former WorldCom Inc. chief Bernard J. Ebbers took the stand in his own defense and told jurors that he was never informed about the accounting fraud that plunged the telecom giant into its 2002 bankruptcy.
Ebbers cast himself as a financial neophyte who delegated all accounting responsibility to Scott D. Sullivan, WorldCom’s former finance chief and the government’s star witness.
“I wasn’t advised by Scott Sullivan on anything ever being wrong,” Ebbers testified in U.S. District Court in New York.
In cross-examination, Assistant U.S. Atty. David Anders sought to show that Ebbers understood basic accounting and was deeply involved in the details of WorldCom’s business.
Ebbers is charged with fraud and faces at least 30 years in prison if convicted.
*
Oil and Gas Futures Go Even Higher
The price of oil raced above $55 a barrel and gasoline hit a record high last week as traders continued to fret about energy supplies despite plentiful U.S. inventories.
Oil’s latest jump came on top of two weeks of increases, which have already reached the pump. Los Angeles motorists have seen the average price of self-serve regular gasoline climb 4 cents in the last week to $2.236 a gallon, AAA reported. Analysts warn that more increases are coming.
The price of oil settled at $53.78 on Friday in New York.
Oil and fuel markets are being driven by the underlying fear that supplies won’t be sufficient to satisfy the world’s voracious energy appetite.
*
ChevronTexaco May Be in Pursuit of Unocal
Oil giant ChevronTexaco Corp. reportedly is considering a takeover of Unocal Corp.
El Segundo-based Unocal, the eighth-largest domestic oil company, long has been considered a buyout target. But speculation has intensified because big energy firms are cash-rich and eager to buy petroleum and natural gas reserves to buttress output.
San Ramon, Calif.-based ChevronTexaco is considering a bid to buy Unocal, but it was unknown whether a formal offer would materialize, the Wall Street Journal reported, citing unidentified sources.
Representatives of Unocal and ChevronTexaco declined to comment. Even so, Unocal’s stock surged as investors bet that a deal is coming.
*
Florida Sues Tenet Over Medicare Billing
Florida’s attorney general filed a lawsuit accusing hospital chain Tenet Healthcare Corp. of scheming to obtain more than $1 billion in improper payments from a Medicare fund.
The lawsuit, filed in federal court in Miami, alleges that the company inflated charges at its 15 Florida facilities from 2000 to 2003 to squeeze more money than it was due from the fund.
Tenet’s actions prevented public hospitals from receiving millions of dollars in payments, the suit claims.
Tenet General Counsel E. Peter Urbanowicz called the allegations unwarranted. He said the company was surprised the suit was brought more than two years after it voluntarily dropped its aggressive outlier pricing strategy and adopted “stringent new policies.”
