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The Honolulu Advertiser

Posted at 11:35 a.m.., Tuesday, September 12, 2006

Wall street rallies for third straight session

Associated Press

NEW YORK — Wall Street rallied for a third straight session today, propelling the Dow Jones industrials up more than 100 points after Goldman Sachs Group Inc. reported results that beat expectations and investors grew more confident that the continuing drop in crude oil prices would boost consumer spending.

After seven days of oil price declines, investors pushed shares of consumer-oriented stocks higher. Companies such as General Motors Corp., home improvement chain Home Depot Inc. and Best Buy Co. all showed strong gains.

"Oil prices and commodity prices are coming down and if that continues we could be headed for a strong fourth quarter," aid Peter Cardillo, chief market analyst at S.W. Bach & Co.

Investors also saw positive momentum from financial services stocks after Goldman Sachs reported better-than-expected third-quarter results, although profits fell as its trading business slowed. Not only did Goldman's earnings bode well for rival investment banks due to report this week, but also signaled that companies have not pulled back from going to the markets with equity deals.

The rally helped lift the Dow to a fourth-month high and the Nasdaq composite index and Standard & Poor's 500 index to three-month highs.

According to preliminary calculations, the Dow rose 101.25, or 0.89 percent, to 11,498.09, while the S&P 500 was up 13.57 or 1.04 percent, at 1,313.11. The Nasdaq composite index rose 42.57, or 1.96 percent, to 2,215.82.

Bonds also advanced, with the yield on the benchmark 10-year Treasury note falling to 4.77 percent from 4.80 percent yesterday. The dollar was mixed against other major currencies, while gold prices fell after falling below $600 an ounce yesterday for the first time in more than two months.

Oil prices fell for the seventh straight day, falling $1.85 per barrel to $63.76 on the New York Mercantile Exchange. That's the lowest close for crude since late March. Prices fell despite a foiled attack on the U.S. embassy in Damascus.

Cardillo also said Wall Street's decision not to dwell on a record trade deficit figure released today pushed stocks higher. The Commerce Department reported that the country's trade deficit ballooned to a record $68 billion in July amid high oil prices, jumping 5 percent from the June imbalance.

In the absence of economic news, stocks drew support from corporate announcements. Stronger consumer sentiment helped propel General Motors up $1.39, or 4.37 percent, to $33.23, a new 52-week high. Also, Home Depot added $1.60, or 4.56 percent, to $36.66.

Best Buy, which reported second-quarter profit rose 22 percent, advanced $4.37, or 9.15 percent, to $52.14. The nation's largest consumer electronics retailer beat Wall Street projections.

Investors rallied behind financial shares after Goldman beat Wall Street, projections for the third quarter, although profit fell as its trading business slowed. Goldman rose $7.29, or 4.83 percent, to $158.29.

News came just as the market opened that Bristol-Myers Chief Executive Peter Dolan and the company's general counsel would both be leaving the company. Dolan was sharply criticized for the company's conduct related to a failed agreement with Canadian drug maker Apotex to keep a generic version of Bristol's No. 1 drug, Plavix, off the market. The company said today it did not find it had done anything wrong, which appeared to put investors at ease.

Bristol-Myers said board member James M. Cornelius would serve as interim chief executive while a search for a permanent CEO proceeds. Bristol-Myers rose $1.06, or 4.53 percent, to $24.45.

Meanwhile, Hewlett Packard announced that Patricia Dunn will step aside as chairwoman Jan. 18 and will be succeeded by CEO Mark Hurd. Dunn apologized for inappropriate techniques employed in an investigation of leaks to the media; the inquiry delved into phone records of board members and reporters. H-P advanced 56 cents to $36.92.

The decisions announced today came as little surprise following controversy at both companies.

Apple Computer Inc. saw a modest lift after announcing a series of new products, including a way to beam video to televisions and an iPod Nano with a longer battery life. Shares rose 13 cents to $72.63.

The Russell 2000 index of smaller companies rose 16.91, or 2.39 percent, to 724.48.

Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where volume came to 1.80 billion shares, compared with 1.68 billion traded yesterday.

Overseas, Japan's Nikkei stock average closed down 0.48 percent. Britain's FTSE 100 was up 0.76 percent, Germany's DAX index rose 1.30 percent, and France's CAC-40 was up 1.34 percent.