Stocks Gain Further Ground
Lower oil prices and a rebound in manufacturing activity helped Wall Street extend its recent rally Friday, lifting the Dow Jones industrials and the Standard & Poor’s 500 index to fresh five-year highs for the fourth straight session.
Most major stock indexes gained 2% or more for the week.
Investors cheered a Federal Reserve report that the nation’s industrial production grew 0.7% in February after sliding 0.3% the month before. An onset of cold weather drove an upswing in utilities’ output last month.
The economic data overshadowed downbeat earnings news from General Motors, which said its 2005 loss was $2 billion more than originally reported.
Trading was volatile amid sharply higher volume as four types of options and futures contracts expired, known as the quarterly “quadruple witching” event.
Still, advancing issues led decliners by 6 to 5 on the New York Stock Exchange.
The Dow climbed 26.41 points, or 0.2%, to 11,279.65, its highest level since reaching 11,301.74 on May 21, 2001.
The S&P; 500 index rose 1.92 points, or 0.2%, to 1,307.25, its highest close since May 22, 2001. The Nasdaq composite index was up 6.92 points, or 0.3%, to 2,306.48.
Indexes hitting all-time highs included the NYSE composite, the small-stock Russell 2,000 and the Bloomberg real estate investment trust index.
For the week, the Dow rose 1.8%, the S&P; 500 gained 2%, Nasdaq rose 2% and the Russell 2,000 gained 2.7%.
Stocks got a boost early in the week as Treasury bond yields tumbled from multiyear highs after the government reported a decline in retail sales in February.
Bond yields also fell Thursday after the government’s report that the consumer price index edged up a modest 0.1% last month.
But yields were higher Friday. The 10-year T-note yield ended at 4.67%, up from 4.64% on Thursday but down from 4.77% on Monday.
“The market is moderating its inflation expectations,” said Alex Rohner, who helps manage $1.1 billion at Wegelin & Co. “It’s a good time to get into U.S. Treasuries.”
Many analysts expect the Federal Reserve to halt its credit-tightening campaign this year. The question is how many more times the Fed will raise its key short-term rate before stopping.
The Fed’s rate, now 4.5%, is all but certain to rise to 4.75% when policymakers meet March 28.
If economic growth remains moderate and inflation is under control, some experts say the Fed could stop at 4.75%.
Others see the rate going to 5% or 5.25%.
In other trading Friday, crude oil futures pulled back from this week’s run-up after the Organization of the Petroleum Exporting Countries cut its projection for demand this year by 110,000 barrels a day. Oil fell 81 cents to $62.77 a barrel in New York trading.
With few economic reports to guide investors next week, Wall Street is likely to focus on energy prices and any clues from companies about their first-quarter results, said Michael Sheldon, chief investment strategist for Spencer Clarke.
Among Friday’s market highlights:
* GM further rattled auto investors with news that its exposure to Delphi’s bankruptcy could be 56% more than originally estimated, and that costs to cover plant closings would be $500 million more. The automaker revised its 2005 loss to $10.6 billion, up $2 billion from its earlier estimate. GM fell $1.09 to $21.13.
Ford Motor lost 12 cents to $7.81.
* Boeing jumped $1.12 to a record $77.85 for the biggest gain in the Dow average. The company said it met with its top suppliers Tuesday and Wednesday to discuss boosting aircraft production.
* Copper and zinc prices rose to records, leading a rally in base metals and boosting shares of mining firms including Phelps Dodge and Southern Copper. Phelps Dodge climbed $3.06 to $75.57; Southern Copper $2.38 to $83.89.
* Maytag fell $1.23, or 6.9%, to $16.71 for the steepest drop in the S&P; 500. The Justice Department may fight Whirlpool’s proposed $1.68-billion purchase of its rival on concern that the deal is anti-competitive, people familiar with the case say. Whirlpool slid $1.29 to $86.25. The companies declined to comment.
* Sirius Satellite Radio added 38 cents to $4.89 after the company said it signed an exclusive five-year agreement for Volkswagen to put its receivers in 80% of the automaker’s U.S. cars starting with 2007 models. Its bigger rival, XM Satellite Radio, gained 57 cents to $20.74.
* Newspaper stocks were broadly lower. Gannett fell $1.53 to $59.04, New York Times lost 58 cents to $26.05 and Tribune, parent of The Times, tumbled $1.41 to $29.36.
