Stocks End Higher
Stocks finished higher Wednesday, in a continuation of an impressive advance that has sent the major indexes to new highs for the year.
The Dow Jones industrial average rose 45.19 points, or 0.47%, to 9,568.46. The broader Standard & Poor's 500 index gained 4.28 points, or 0.42%, to 1,026.27. The tech-heavy Nasdaq composite index climbed 11.42 points, or 0.62%, to 1,852.9.
Helping the bullish tone Wednesday was news from Cisco Systems (CSCO ) CEO John Chambers, who reportedly said August orders were better than expected. However, the exec says he's uncertain if August results are sustainable. Cisco shares rose on the comments.
A few stocks rose on analysts' comments. Wachovia upgraded shares of Oracle (ORCL ) to overweight on the belief that the company will benefit from a recovery in enterprise software spending.
JP Morgan upgraded General Electric (GE ) to a neutral from underweight, while CS First Boston raised Siebel Systems (SEBL ) to outperform from neutral.
Airline stocks climbed on news that Continental Airlines (CAL ) estimates 4% to 5% higher August mainline passenger revenue per available seat mile. The airline posted a record August load factor of 70.7%, up 4.3%. Also, Merrill Lynch added shares of American Airline parent AMR (AMR ) to its Focus List.
Adtran (ADTN ) shares surged after the telecom outfit raised its third-quarter revenue guidance to $98 million to $100 million. Adtran sees third-quarter earnings per share of 34 cents to 36 cents.
Telecom services provider Qwest Communications (Q ) beat Wall Street earnings expectations by two pennies. The company reported a second-quarter loss per share of 5 cents on $3.439 billion in operating revenue. Qwest says it's on track to meet previously announced 2003 guidance.
In deal news, Vivendi Universal (V ) agreed to sell its film and television assets to General Electric's NBC unit for equity valued at roughly $14 billion. GE would own 80% of the new U.S. media giant -- which would include Vivendi's Universal Pictures movie studio, its television-production group, three cable networks, and the Universal theme parks merged with NBC -- and Vivendi would own about 20%.
Caremark Rx (CMX ) agreed to acquire rival pharmacy-benefit manager AdvancePCS (ADVP ) for about $5.6 billion, mostly in stock.
In economic news, U.S. construction spending rose 0.2% in July -- weaker than expected -- but was revised up to a 0.7% gain in June from a 0.3% gain previously. Total private construction climbed 0.5%, while public construction fell 0.4%. Strength was in the residential component, which rose 0.6%. "The data reflect the solid performance of the housing market heading into the summer and support our bullish outlook on growth," says economic research outfit MMS International.
The Federal Reserve said in its Beige Book that it saw continued improvement in the U.S. economy in July and August, with consumption up at least modestly in most regions. Manufacturing also improved slightly in 10 out of 12 regions, but the labor markets remain "slack." The report "contains little to alter our view of steady policy and no bias change" when the Federal Open Market Committe meets Sept. 16, says MMS.
In other news, nearly all auto manufacturers reported sales well-above expectations for August, notes MMS International. Also out was the Mortgage Bankers Association's refinancing index, which fell 8.6%, the ninth straight weekly decline.
Thursday's economic releases include weekly jobless claims, factory orders, the ISM services index, and a revision in second-quarter productivity growth. The main focus, though, will be Friday's employment report.
In other news Wednesday, New York Attorney General Elliot Spitzer announced a $40 million settlement with a large hedge fund over illegal trading in mutual funds. The fund, Canary Capital Partners, LLC, will cooperate with Spitzer in an ongoing investigation of the mutual fund industry. According to Spitzer's office, Canary obtained special trading opportunities with leading mutual fund families – including Bank of America's Nations Funds, Banc One, Janus and Strong.
Treasuries sulked near session lows on Wednesday, as bears took a pause from yesterday's rout ahead of key payrolls data on Friday. Trading conditions in Treasuryland were extremely light, though firmer stocks, and solid construction spending and auto sales data provided stiff headwinds against much short-covering.
The curve steepened modestly after dovish talk from Federal Reserve governor Parry, while the hedge fund settlement negotiated by New York Attorney General Spitzer mostly dented the dollar. The yield on the 10-year note was 4.60%.
European stock markets were higher. London's Financial Times-Stock Exchange 100 index rose 57.7 points, or 1.37%, to 4,262.1, as the August UK PMI services index rose to 57.0 from 56.6. Investors were ignoring a CBI report that retail slowed due to record heat wave that kept people away from stores.
In Paris, the CAC 40 gained 58.85 points, or 1.75%, to 3,422.78. Germany's DAX index climbed 80.31 points, or 2.25%, to 3,647.51.
Asian markets finished higher. The Nikkei 225 index rose 25.61 points, or 0.24%, to close at 10,715.69 as stocks came off their best levels on mild profit-taking. The earlier gains were fueled by an overnight jump on Wall Street following on further evidence of global economic growth. In Hong Kong, the Hang Seng index jumped 162.42 points, or 1.48%, to close at 11,102.36.