Dow finishes week up 3.7%

Nasdaq rises 5.8%, S&P 500 is up 2.9% in 4th week of gains

Leaving the funk behind

October 27, 2001|By BLOOMBERG NEWS

NEW YORK - Stocks rose yesterday, buoyed by speculation that the worst of the economic slump is ending and corporate profits will rebound next year. Benchmark indexes rose for the fourth week out of five.

Defense contractors United Technologies Corp. and Boeing Co. led the advance in the Dow Jones industrial average after Lockheed Martin Corp. boosted its earnings forecast for this year and next.

JDS Uniphase Corp. and VeriSign Corp. Inc. declined amid slumping sales, leading the Nasdaq composite index lower.

"We are in better shape than we were a month ago," said Allen Ashcroft, who manages $40 million at Allied Investment Advisors Inc. "The market is slowly starting to come out of whatever funk we were in before the Sept. 11 terror attacks."

Ashcroft has been buying shares of technology and energy companies because those groups will rally when the economy picks up, he said. He has been selling telephone stocks.

The Dow climbed 82.27, or 0.9 percent, to 9,545.17, boosting its gain this week to 3.7 percent.

The Standard & Poor's 500 index rose 4.52, or 0.4 percent, to 1,104.61, pushing it up 2.9 percent this week. General Electric Co., AOL Time Warner Inc. and Exxon Mobil Corp. helped lead the advance.

The Nasdaq lost 6.51, or 0.4 percent, to 1,768.96. Even so, it rose 5.8 percent in the past five days.

The S&P 500 is still down 16 percent this year. The Nasdaq, which is 4.3 percent above its pre-attack level, has lost 28 percent since the beginning of the year. The Dow, down 0.6 in the past six weeks, is 12 percent lower this year.

Other broad market indexes were up moderately for the day. The Russell 2000 index, a benchmark of small-cap stocks, rose 2.69 yesterday to 438.65, and the Wilshire 5000 total market index added 42.41 to 10,185.53.

The Sun-Bloomberg index of the top stocks in Maryland gained 1.38 to 200.50.

No moon shot

"We're not expecting a moon shot from here," said Sally Anderson, who helps manage $2.5 billion at Kopp Investment Advisors in Edina, Minn. Even so, stocks could go back down and "test" the lows set in the week after the attacks. The S&P 500 touched a three-year trough Sept. 21.

Analysts expect corporate profits to rebound next year, starting in the second quarter. They predict earnings at S&P 500 companies will rise 10.1 percent in the April to June period and will grow 15.8 percent for the full year.

Corporate earnings dropped 21.1 percent in the third quarter when compared with last year's third quarter.

More than 1.1 billion shares traded on the New York Stock Exchange, down 6 percent from the three-month daily average. Almost three stocks rose for every two that fell on the Big Board, while seven stocks gained for every six that declined on the Nasdaq stock market.

Lockheed Martin climbed $1.93 to $50.83. The largest defense contractor raised its profit forecast for this year and next, and, after the close of trading, learned that it had landed the Joint Strike Fighter contract. The shares rose to $53.25 after hours.

Boeing, the largest plane maker, added $1.78 to $37.68, then fell below $35 after hours. United Technologies, which makes Pratt & Whitney jet engines, advanced $2.54 to $57.01.

Raytheon Co., whose Tomahawk missiles are being used in the U.S. attacks on Afghanistan, gained 75 cents to $34. Honeywell International Inc., the largest maker of cockpit equipment and automated controls, gained $1 to $30.

JDS Uniphase fell $1.19 to $8.77. The biggest maker of fiber- optic components said fiscal first-quarter sales tumbled 58 percent and second-quarter revenue may fall 10 percent to 15 percent from the previous period as demand for telecommunications gear wanes.

JDS and other equipment makers, including Sycamore Networks Inc. and Corning Inc., have struggled as telecommunications companies slowed plans to expand networks, decreasing demand for fiber-optic products. JDS, Sycamore and Corning have all lost more than three-quarters of their value this year.

Ciena declines $1.99

Ciena Corp. of Linthicum, which also makes fiber-optic equipment, slid $1.99 to $19.80.

VeriSign shed $10.52, or 20 percent, to $42.82. The provider of Internet registration and security services reported slower sales in the third-quarter.

Flextronics International Ltd. dropped $2.96 to $21.72 after the second-largest contract electronics manufacturer said earnings for this quarter would fall short of forecasts. Flextronics is firing 10,000 workers, or 15 percent of its staff, and shifting work to cheaper plants to save money.

Ericsson AB gained 13 cents to $4.48 after the largest maker of wireless networks said Michael Treschow will replace Lars Ramqvist as chairman, sparking optimism he will help speed the company's return to profitability.

Enron Corp. dropped 95 cents to $15.40. The largest energy trader tapped a $3 billion credit line as investors expressed concern the company's credit rating may be cut, reducing its ability to finance daily operations.

The company has lost more than half its value in the past eight days amid an investigation by the Securities and Exchange Commission into its transactions with affiliated companies run by Enron's former chief financial officer.

Overseas, Japan's Nikkei stock average ended Friday down 0.8 percent. Germany's DAX index was up 2.2 percent, France's CAC-40 rose 2.3 percent and Britain's FTSE 100 advanced 2 percent.

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