Dow, S&P; rebound for gain on week
The stock market closed out a bumpy week with a moderate advance Friday triggered by takeover news and fresh economic reports, allowing the major indexes to post gains for the week.
Tech stocks charged higher on a bid by Oracle for BEA Systems, which renewed investors’ hope that acquisition activity was picking up again after the uncertainty of the summer’s credit crisis.
Amid the economic data that Wall Street mined Friday for signals about the health of the economy, the government reported that retail sales showed a stronger-than-expected gain last month.
“The data seemed to reinforce that the economy is slowing, but perhaps not as precipitously as feared. And that may put the Fed on hold in October,” said Derrick Wulf, portfolio manager at Dwight Asset Management Co.
The Dow Jones industrial average rose 77.96 points, or 0.6%, to 14,093.08.
Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 7.39 points, or 0.5%, to 1,561.80. The tech-dominated Nasdaq composite index jumped 33.48 points, or 1.2%, to 2,805.68. The Russell 2,000 index of smaller companies rose 6.19 points, or 0.7%, to 841.17.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange.
The advance came after both the Dow and S&P; fell two straight days as investors worried about third-quarter earnings and what companies might say about the economy. Investors were disappointed by reports from Alcoa and General Electric and warnings from names like Chevron and International Paper.
But stocks stayed afloat during the week, buoyed by the release of minutes from the Federal Reserve’s Sept. 18 meeting, at which officials decided to cut the central bank’s benchmark interest rate half a percentage point. Investors read the minutes as suggesting Fed governors would be receptive to a second rate cut.
For the week, the Dow was up 0.2%, the S&P; 500 rose 0.3%, the Nasdaq gained 0.9% and the Russell 2,000 fell 0.4%.
Bond yields rose along with stock prices. The yield on the benchmark 10-year Treasury note finished at 4.68%, up from 4.64% late Thursday.
The dollar climbed against the yen and the euro, while gold prices fell.
Oil climbed to a record close on concerns that supplies won’t meet demand in the fourth quarter. Crude futures settled at $83.69, up 61 cents, in New York after topping $84 to set a fresh trading high.
Economic readings appeared to give a boost to stocks. The Commerce Department reported that retail sales rose 0.6% in September from August -- double the growth economists had been expecting. The report came a day after many national retailers reported seeing sluggish demand in September.
Technology stocks surged on the Oracle-BEA news, sending a tech share index up 1.1%, the steepest gain among 10 industries in the S&P; 500.
Robert Streed, portfolio manager of Northern Trust Select Equity Fund in Chicago, said the offer by Oracle helped revive optimism about corporate acquisitions.
“This is psychologically important because it shows insiders see value in acquiring companies,” he said. “It also injects cash into the system.”
Oracle, the business software maker, confirmed it offered to buy BEA Systems for more than $6.66 billion. Oracle said it sent a letter to the software maker’s board offering $17 a share, 25% above BEA’s closing price Thursday of $13.62. BEA surged $5.20, or 38%, on Friday to $18.82, while Oracle fell 2 cents to $22.44.
In other market highlights:
* McDonald’s said its global same-store sales -- or sales at stores open at least a year -- rose a stronger-than-expected 5.9% in September. The nation’s No. 1 hamburger chain also forecast earnings for the quarter well above Wall Street analysts’ expectations. McDonald’s shares rose 77 cents, or 1.4%, to $57.02.
* General Motors surged $2.65, or 6.6%, to $42.64 after posting a 22% increase in sales in its region that covers Latin America, Africa and the Middle East. Shares of the automaker had jumped Thursday after a decision by union members to ratify a new contract with the company.
* General Electric fell 57 cents, or 1.4%, to $41.03 after the conglomerate reported that its third-quarter earnings rose 14% on strength in its energy and transportation businesses. Many investors regard GE as a bellwether for the U.S. economy because of the company’s wide array of businesses, which include financial services, aircraft engines and NBC Universal.
* Coldwater Creek plunged $3.05, or 28%, to $7.82. The clothing retailer for women 35 and older, revealing that fewer customers were visiting its stores, said it could report a loss of as much as 13 cents a share for the current quarter. Analysts at Wachovia Capital Markets and Lehman Bros. lowered their ratings on the stock.
* Overseas, key stock indexes fell 0.7% in Japan and 0.3% in France, while shares rose 0.1% in Britain and Germany.
