Broad advance caps stocks’ strong week
Stocks rose soundly Friday, capping a strong week for Wall Street, as investors continued to draw confidence from a sense that lower interest rates would bolster the economy.
Shares also were boosted by a strong profit report from Oracle that offered fresh evidence that some sectors of the economy continued to hum along even as areas such as housing struggled.
Wall Street’s optimism was renewed this week after the Federal Reserve on Tuesday lowered its benchmark interest rate half a percentage point, more than expected. The central bank also cut by a half-point the rate that banks pay to borrow from the Fed.
“As much as we often underestimate the depth of our problems it’s also natural for us to underestimate the depth and robustness of our economy,” said Robert Brown, chief investment officer at Genworth Financial Asset Management. “There are many industry segments that are very healthy.”
But he added that some investors were ignoring legitimate economic concerns.
The Dow Jones industrial average rose 53.49 points, or 0.4%, on Friday to 13,820.19.
Broader stock indicators advanced more sharply. The Standard & Poor’s 500 index rose 7 points, or 0.6%, to 1,525.75, and the Nasdaq composite index climbed 16.93 points, or 0.6%, to 2,671.22.
The Russell 2,000 index of smaller companies rose 3.35 points, or 0.4%, to 813.11.
For the week, the Dow and the S&P; 500 were both up 2.8%, marking the strongest weekly showing for each since March. Nasdaq rose 2.7%, its best weekly gain since last month.
Advancing issues outnumbered decliners by more than 3 to 2 on the New York Stock Exchange, where consolidated volume came to 3.67 billion shares. Helping to swell volume was “triple witching,” a once-a-quarter occurrence marked by the simultaneous expiration of contracts for stock index futures, index options and stock options.
Treasury bond yields, which had jumped in recent sessions as some investors moved money into riskier securities and as others worried about inflationary effects of the Fed’s easing, slipped Friday. The yield on the benchmark 10-year Treasury note dropped to 4.62% from 4.70% late Thursday.
Norman Ali, portfolio manager at MFC Global Investment Management, said Wall Street, in addition to being enthusiastic about the rate cuts, was relieved that some of the major brokerages reporting results this week didn’t fare worse during the quarter, given the recent upheaval in the credit markets.
Another positive, Ali said, was that inflation readings this week, such as the consumer price index, didn’t show unnerving increases.
“We expect another rate cut in October because inflation is still not an issue,” he said, noting the economy seemed to be absorbing higher food prices and oil prices at record levels.
Crude oil futures for November delivery fell 16 cents to $81.61 a barrel on the New York Mercantile Exchange. On Thursday, the October contract, now expired, closed at an all-time high above $83 a barrel.
The euro was unchanged against the dollar at a record high of $1.408. French President Nicolas Sarkozy pressed the European Central Bank to lower interest rates to rein in the strong euro.
The dollar climbed against the yen, while gold prices slipped from a 27-year high, ending at $731.40 an ounce.
In other market highlights:
* Oracle rose 93 cents, or 4.4%, to $21.98 after reporting that its quarterly earnings rose 25% as sales grew at their fastest pace in seven years.
* Harman International Industries closed down $27.25, or 24%, at $85 after the maker of upscale audio gear confirmed reports that two private equity firms had backed out of an $8-billion deal to buy the company.
* Cosmetics maker Estee Lauder advanced $1.95, or 4.8%, to $42.58 on takeover rumors.
* Joy Global rose 91 cents to $49.59 after the mining equipment company affirmed its full-year earnings and revenue forecasts.
* Overseas, key stock indexes climbed 0.4% in Britain, 0.8% in Germany, 0.2% in France and 0.6% in Hong Kong. Shares fell 0.6% in Japan.
