Latest gains may signal end to long stock slide
By Josh P. Hamilton
Bloomberg News Service
NEW YORK — U.S. stocks rose, and the Standard & Poor's 500 Index climbed for the first week in four, after a survey showed consumers were more confident than previously estimated.
Some investors said the gains suggested that stocks, mired in their third year of declines, may not fall much further. The S&P 500 and the Dow Jones Industrial Average ended the week higher than they closed two days ago, when the benchmarks had their biggest rally in almost 15 years.
"It's a good sign that people are willing to stay in the market over the weekend," said Heather O'Loughlin, an analyst who follows technology companies for State Street Global Advisors, which manages $803 billion in Boston. "Some of the negative sentiment may be slowing."
Microsoft Corp. led the S&P 500 higher. The index rose 14.16, or 1.7 percent, to 852.84. The Dow added 78.08, or 1 percent, to 8264.39. The Nasdaq Composite Index advanced 22.04, or 1.8 percent, to 1262.12.
For the week, the S&P 500 climbed 0.6 percent and the Dow gained 3.1 percent, snapping a two-week losing streak. The Nasdaq fell for the ninth week in 10, dropping 4.3 percent.
Retailers including Wal-Mart Stores Inc. and Bed Bath & Beyond Inc. rose after the University of Michigan reported its consumer sentiment index for this month was 88.1, compared with a preliminary report of 86.5. That was down from June's 92.4.
"There were expectations that the consumer confidence number would come in aggressively lower" because of a slump in stocks this month, said Joseph Dorilio, head of trading at ING Financial Markets.
The Dow and S&P 500 swung between gains and losses before rising to the day's highs in the final hour of trading.
"I don't have the courage to buy another rally here only to have it roll over and fade," said David Briggs, head equity trader for Federated Investors Inc., which manages $145 billion in Pittsburgh. "I've got tire tracks all over me from all the faded rallies over the past year. If it was the bottom, there's still time to get in."
Most recently, the S&P 500 jumped 3.7 percent on July 5, only to slump almost 9 percent over the next seven days.
About 1.8 billion shares traded on the New York Stock Exchange, the first day in six trading was below 2 billion.
The S&P 500 has lost 26 percent this year, the Dow has dropped 18 percent. The Nasdaq has tumbled 75 percent from its March 2000 peak. All are in their third year of declines.
"Stocks around the world are poised for a powerful rally," said Barton Biggs, chief global strategist at Morgan Stanley, in a note to clients. "Sentiment is at bearish extremes that invariably have been excellent buying points in the past."
Gainers
Microsoft rose $2.52 to $45.35. The largest software maker yesterday fell to its lowest level in more than 1 1/2 years.
Tyco International Ltd. surged $3.78 to $12.03 after appointing Motorola Inc. President and Chief Operating Officer Edward Breen as chairman and chief executive officer. Its former CEO, Dennis Kozlowski, was charged last month with evading New York sales taxes.
Motorola, the world's second-largest maker of mobile phones, fell $1.28 to $10.90.
AOL Time Warner Inc. advanced $1.26 to $10.90. The stock's four-year low represented a buying opportunity, the Wall Street Journal reported in its "Heard on the Street" column.
General Electric Co. climbed $1.15 to $27.80 after Chief Executive Officer Jeff Immelt took control of the company's General Electric Capital Corp. finance arm, ousting the unit's chairman, Denis Nayden, and splitting it into four units. The move eliminates a layer of management and will make financial results more transparent, the company said.
Insurers rise
American International Group Inc. gained $3.71 to $56.82. The world's biggest insurer yesterday said net income rose 37 percent in the second quarter as it raised prices for auto and business policies and sold more life insurance. American International still is down 31 percent this year.
St. Paul Cos. advanced $2.80 to $27. The insurer's planned sale of $760.1 million of securities eased concerns about a shortage of capital after the company postponed the sale of its reinsurance unit.
Electronic Arts Inc. rose $2.64 to $58.36. The biggest U.S. maker of video-game software earned
5 cents a share in the fiscal first quarter as it sold more games for personal computers and consoles such as Sony Corp.'s PlayStation 2. Analysts had forecast an 8-cent loss.
Williams Cos. climbed 18 cents to $1.06. The energy trader and No. 2 U.S. pipeline company reached an agreement to renegotiate its power-supply contract with California, ending a challenge before U.S. regulators.
Boeing declines
International Business Machines Corp. dropped $2.95 to $66.40, and was the biggest drag on the Dow and S&P 500. The loss resulted from speculation the largest computer maker faces weak personal-computer demand and has underfunded its pension fund, said Matt Johnson, head trader at Lehman Brothers Inc. "We don't comment on rumors," said IBM spokeswoman Carol Makovich.
Boeing Co. fell 94 cents to $42. Planemakers have signed orders for 48 planes so far at the Farnborough, England, air show, which concludes tomorrow. That compares with contracts for a combined 330 planes worth $27 billion signed at Farnborough two years ago by Boeing and its main rival Airbus SAS.
Makers of aircraft components, also fell. Raytheon Co. lost 93 cents to $29.80; Northrop Grumman Corp. shed $2.50 to $103.45.
