Posted at 12 p.m., Wednesday, June 20, 2001
Market rises after report of stable ad revenues
Bloomberg News Service
NEW YORK — U.S. stocks rose on optimism the worst of the profit slowdown has passed after AOL Time Warner Inc. said advertising revenue has stopped falling.
"That's clearly a positive for several areas of the market," said Andy Damm, who helps manage $201 billion at Blackrock Advisors Inc., in Wilmington, Delaware.
The Standard & Poor's 500 Index gained 5.56, or 0.5 percent, to 1218.14, as Viacom Inc., Walt Disney Co. and General Electric Co., owner of NBC television, climbed with AOL Time Warner.
J.P. Morgan Chase & Co. and Citigroup Inc. rose, helping lift the Dow Jones Industrial Average 21.87, or 0.2 percent, to 10,618.54.
The Nasdaq Composite Index advanced 3.16, or 0.2 percent, to 1995.82, extending yesterday's 0.2 percent gain, which was its first in eight days.
The Nasdaq had dropped 12 percent during its seven-session losing streak as computer-related and telecommunications companies including Nortel Networks Corp. and Nokia Oyj reduced sales and profit forecasts.
Internet and media company AOL Time Warner's comments, coupled with software maker Oracle Corp.'s forecast Monday that sales will pick up later this year, made investors more optimistic that profits will rebound.
Five stocks rose for every four that fell on the New York Stock Exchange and the Nasdaq Stock Market. Some 993 million shares traded on the Big Board by 2:45 p.m. New York time, up 26 percent from a week ago.
AOL Time Warner gained $2.06 to $51.90. The company, whose businesses include Cable News Network, the America Online Internet service and Time magazine, said it will meet cash-flow and sales forecasts for 2001.
"I'm not sure there is an upturn yet, but I do think advertising revenues are stabilizing," Chief Executive Gerald Levin told Reuters.
Class B shares of Viacom, which owns the CBS, MTV and Showtime networks, rose $2.08 to $53.08; Disney, parent of ABC television, climbed 39 cents to $29.24; and GE gained $1.09 to $49.96.
Among other active stocks, Microsoft Corp. advanced 97 cents to $68.29. Oracle rose 59 cents to $17.35 after gaining 13 percent yesterday.
Still, even a rebound in the economy won't help makers of equipment for phone and computer networks, because there are a shrinking number of customers for the gear, investors say.
Tellabs Inc. slid $5.19 to $16.01, giving the shares a loss of 72 percent this year. The manufacturer of equipment for managing telephone traffic lowered its second-quarter revenue forecast by more than a third because of weaker demand from customers.
JDS Uniphase Corp. lost 90 cents to $9.94. The biggest maker of fiver-optic equipment lowered its sales forecast on Friday; the shares have fallen 43 percent in two weeks.
The Nasdaq Telecomm Index has fallen for nine straight days.
Teradyne Inc. fell $3.15 to $35. The maker of semiconductor- testing equipment said it expects to lose more money in the second quarter than analysts had forecast.
Jabil Circuit Inc. lost $1.66 to $23.45. The contract electronics manufacturer said fiscal third-quarter profit fell more than half and cut its earnings forecast for this quarter.
Financial shares rallied on optimism that lower interest rates will spur the economy, reviving stock and bond underwriting and trading for Wall Street firms and boosting banks' lending business.
Citigroup Inc., which owns investment bank Salomon Smith Barney Inc., rose 37 cents to $51.12, J.P. Morgan Chase & Co. gained 98 cents to $45.50 and Bank of America Corp. rallied 90 cents to $60.62.
Golden West Financial Corp., the third-largest U.S. savings and loan, rose 72 cents to $67.22 and Fifth Third Bancorp rose 87 cents to $60.31.
Bear Stearns Cos. rose $1.65 to $55.01. The sixth-biggest U.S. securities firm reported fiscal second-quarter profit that topped forecasts as revenue from fixed-income underwriting climbed.
The Russell 2000 Index of smaller stocks rose 2.67, or 0.6 percent, to 491.40, while the Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, gained 49.70, or 0.4 percent, to 11,244.53.
