Wall Street stocks rise
Wall Street extended its fourth-quarter rally into a second day, supported by falling oil prices and a bullish assessment of the economy from a Federal Reserve official.
Investors were cheered by a dip in oil prices, which backed off the 50 dollar per barrel mark at Friday’s close of trading. A barrel of light crude closed at 49.91 dollars, down 21 cents, on the New York Mercantile Exchange.
Stocks received a boost before the session opened when Philadelphia Federal Reserve President Anthony Santomero said in a speech he expected the economy to grow by 3.5% to 4% through 2005. His comments and the buying that customarily opens a new quarter gave stocks their gains – although analysts said recent economic data and the forecast for third-quarter earnings might not support the bullishness.
“You’ve had some fundamental chinks in the armour that have shown themselves over the week, with the economic data and the pre-announcement warnings we’ve seen,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research. “This buying is kind of disconnected from that, and it should come back to earth in a few days.”
The Dow Jones industrial average rose 23.89, or 0.2%, to 10,216.54, its second straight positive session. The Dow climbed 112.38 on Friday.
Broader stock indicators were moderately higher. The Standard & Poor’s 500 index was up 3.67, or 0.3% at 1,135.17, and the Nasdaq composite index gained 10.20, or 0.5%, to 1,952.40.
With the market having advanced four of the last five sessions, investors were growing optimistic about a fourth-quarter rally, and were looking past third-quarter earnings, which many expect to be disappointing. But Friday’s monthly job creation report, one of the most closely watched reports on the economy, will likely shape trading for weeks to come.
“I think the third quarter earnings are already priced in, so any surprises we get out of there will be a positive for the market,” said Neil Massa, equity trader at John Hancock Funds. “We also have the jobs figure on Friday, and that has the potential to be either really good for the market, or spark a major sell-off.”
The Commerce Department reported a slim 0.1% decrease in factory orders in August, less than the 0.1% increase forecast on Wall Street. However, the department boosted July’s factory order hike to 1.7%, up from 1.3%, showing that the nation’s factories continued to produce at a high rate even during the worst of the summer’s economic slowdown.
Dow component American International Group Inc, one of the world’s largest insurance firms, slipped 23 cents to 68.49 dollars after it announced the Securities and Exchange Commission may sue the company for alleged violations of federal securities laws, based on allegedly misleading statements AIG made in recent press releases.
Wal-Mart Stores Inc, the closely watched bellwether for the retail sector, pleased investors as it announced that sales at its stores open at least a year rose 2.3% in September, somewhat making up for a disappointing August. While sales fell compared to a year ago, investors saw the increase as a plus, especially considering the recent lack of consumer spending. The company also approved an additional three billion dollar stock buyback program, adding to a seven billion dollar program previously announced. Wal-Mart rose 18 cents to 53.31 dollars.
Office Depot Inc. gained six cents to 15.14 dollars after it announced that chairman and chief executive Bruce Nelson resigned his post after reaching an agreement with the company’s board of directors. Director Neil Austrian will serve as interim chairman and CEO until a permanent replacement is found.
PeopleSoft Inc. said it expected increases in both revenue and net income for the third quarter. The company, which fired president and chief executive Craig Conway on Friday, is now considered to be on track to be acquired by Oracle Corp., which fought a bitter battle with the Conway-led software maker. PeopleSoft dropped 63 cents to 22.20 dollars after gaining 15% on Friday, and Oracle slipped two cents to 11.987 dollars.
Advancing issues outnumbered decliners by nearly 8 to 5 on the New York Stock Exchange, where volume came to 1.53 billion shares, compared with 1.58 billion on Friday.
The Russell 2000 index of smaller companies was up 4.06, or 0.7%, at 589.09.
