Dow Average Has Biggest Weekly Surge in 20 Years on U.S. Invasion of Iraq
quote.bloomberg.com
U.S. Stocks Rise as Iraq Offensive Advances; GE, Pfizer Gain
By Scarlet Fu
New York, March 21 (Bloomberg) -- U.S. stocks rose, pushing the Standard & Poor's 500 Index and Dow Jones Industrial Average higher for the year, as the U.S. and U.K. attacked Baghdad by air while ground troops moved into southern Iraq.
``The market has become a bellwether for success or disappointment in the Iraqi war,'' Henry Cavanna, who has worked on Wall Street for more than three decades and now runs Cavanna Capital Management, told Bloomberg Television. ``This stock market is not a normal stock market right now. It's in a zone that's totally driven by one event.''
The S&P 500 rose 17.65, or 2 percent, to 893.49 at 3:34 p.m. in New York, led by General Electric Co. and Pfizer Inc. The Dow added 213.59, or 2.6 percent, to 8500.19. The Nasdaq Composite Index climbed 16.40, or 1.2 percent, to 1419.17.
For the week, the S&P 500 has risen 7.2 percent, the Dow has added 8.1 percent and the Nasdaq has climbed 5.9 percent. The gains have lifted the S&P 500 by 1.5 percent for the year, and the Dow up by 1.8 percent. Investors cited optimism the war will end in days or weeks and spark a recovery in consumer and business spending.
``There is a prevailing thought process that the only thing sitting on the U.S. economy is this war,'' said Matt Johnson, head of trading at Lehman Brothers Inc.
Dead or Alive?
Stocks jumped after the BBC reported, citing a U.K. official, that Iraqi leader Saddam Hussein may have been killed. Admiral Sir Michael Boyce, the U.K.'s chief of defense staff, said he's ``not aware'' whether Hussein was killed in initial air strikes on Baghdad.
Allied troops may be in Baghdad in three or four days, the BBC said, citing an unidentified U.K. military official. Allied ground troops pushed through southern Iraq in two broad columns. One seized the region's oilfields and moved toward Basra, the second-largest city; the other headed toward Baghdad. Forty- five of the targets were homes or compounds thought to house Iraqi leaders and security forces, NBC News reported.
``There's relief so far that nothing really unexpected has happened in Iraq,'' said Eric Thorne, who helps manage $1.7 billion at Bryn Mawr Trust Co. in Philadelphia. ``Everything is going according to plan.'' He recently trimmed his position in diaper maker Kimberly-Clark Corp. and is considering buying shares of Cisco Systems Inc., the largest maker of computer-networking equipment, and technology companies.
Two stocks rose for every one that fell on the New York Stock Exchange while four advanced for every three that declined on the Nasdaq Stock Market.
About 1.53 billion shares traded on the Big Board, up 13 percent from a week ago. Trading increased amid the quarterly expiration of options on stocks and stock indexes, and of futures on stocks and stock indexes.
GE, Pfizer Gain
General Electric, which has the second-largest market value, climbed 75 cents to $27.60. Pfizer, the world's biggest drugmaker, added 87 cents to $31.67.
General Electric, which owns the NBC television network, and other media companies gained on optimism a short war wouldn't disrupt advertising revenue as much as some investors had expected, said Jeffrey Logsdon, analyst at Gerard Klauer Mattison & Co.
Walt Disney Co., the second-largest U.S. media company and owner of the ABC network, jumped $1.31 to $18.45. Viacom Inc., owner of CBS television, rose $1.22 to $41.96.
Micron Technology Inc. rallied 67 cents to $8.67. The world's second-biggest maker of computer-memory chips said sales rose 22 percent in the second quarter and topped the average estimate of analysts surveyed by Thomson Financial. Still, Micron's loss widened because of the cost of job cuts and inventory writedowns.
Eight-Day Rally
The market's rally has lifted the Dow average and the S&P 500 for eight consecutive days. The Dow has added 10.9 percent during the advance and the S&P 500 has risen 12.3 percent.
Optimism that the attack on Iraq would succeed in days or weeks has fueled the advance. For much the same reason, crude oil for May delivery has fallen 24 percent, to $26.91, during the past eight days in New York trading; two-year Treasury note yields have risen 45 basis points, to 1.79 percent; and the euro has fallen 4.6 percent against the dollar, to $1.0538.
Electronic Data Systems Corp. climbed $1.67 to $17.43 after ousting Chief Executive Officer Richard Brown. Under Brown, the world's second-largest computer-services company cut profit forecasts three times last year and the stock lost more than half its value since September. Michael Jordan, a former CBS Corp. CEO, will replace him.
Technology stocks have outperformed the broader market on expectations the companies will be among the first beneficiaries of an economic recovery. The Nasdaq, 44 percent computer-related companies, has gained 5.6 percent this year.
DuPont Climbs
DuPont Co. rose $1.38 to $40.98. The second-biggest U.S. chemical maker said first-quarter profit will be at least 55 cents a share, before certain costs. The average estimate of analysts surveyed by Thomson Financial was 52 cents.
Intuit Inc. was the biggest drag on the S&P 500, losing $11.26 to $39.63. The company, the world's biggest maker of software used to prepare income-tax returns, cut its sales and profit forecasts for this quarter and the year. It said the slumping economy hurt its main sales season.
State Street Corp., the world's largest custodian of financial assets, tumbled $4.90 to $33.60 after trimming its profit forecast. State Street said first-quarter earnings per share will fall by about 50 percent as stock prices drop and global investing slows.
Other trust banks declined following State Street's announcement. Northern Trust Corp. lost $2.03 to $31.13, Bank of New York Co. declined 51 cents to $21.91 and Mellon Financial Corp. shed 25 cents to $22.24.
Adobe Slumps
Adobe Systems Inc. slumped $2.59 to $31.48. WR Hambrecht + Co. analyst William Lennan downgraded the stock to ``hold'' from ``buy'' because the stock is too expensive after it rallied 28 percent this year versus the S&P 500 Systems Software Index's 2.9 percent advance. He recommended prospective buyers to wait until the stock falls below $29.
Palm Inc., the world's biggest maker of handheld computers, slipped 44 cents to $10.45. The company reported a $172.3 million loss in the third quarter as it fired workers and sales dropped for a second period.
S&P 500 futures expiring in June rose 11 to 885.80 on the Chicago Mercantile Exchange. June futures on the Nasdaq-100 Index advanced 7 to 1088. The index, a benchmark for Nasdaq's largest companies, gained 4.66, or 0.4 percent, to 1084.90.
Nasdaq-100 tracking shares, called Cubes because of their QQQ ticker symbol, rose 20 cents to $27. The S&P 500 shares known as Spiders gained 82 cents to $88.97.
The Russell 2000 Index of smaller stocks advanced 2.84, or 0.8 percent, to 373.33. The Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, added 101.63, or 1.2 percent, to 8386.22.
Adobe Systems Inc. (ADBE)
Bank of New York Co. (BK)
DuPont Co. (DD)
Electronic Data Systems Corp. (EDS)
General Electric Co. (GE)
Intuit Inc. (INTU)
Mellon Financial Corp. (MEL)
Micron Technology Inc. (MU)
Microsoft Corp. (MSFT)
Northern Trust Corp. (NTRS)
Palm Inc. (PALM)
State Street Corp.
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