*** Bloomberg Market Summary ***
Top Financial News
Thu, 04 Mar 1999, 7:47pm EST
Stocks in U.S. Rise, Led by Oil, Retail Shares on Bright Economic Outlook
U.S. Stocks Rise, Led by Oil, Retail Shares on Economy Optimism
New York, March 4 (Bloomberg) -- U.S. stocks rose for the
first time in eight sessions as oil, retail and financial shares
gained on optimism that tomorrow's jobs report will show the
economy is growing with little inflation.
International Business Machines Corp. rose after the world's
biggest computer maker won a $16 billion order for computer parts
from Dell Computer Corp.
''There are expectations the economic numbers are going to
be strong tomorrow,'' said Liz Ann Sonders, a money manager for
Avatar Associates Inc., which oversees $3.2 billion. Today's
rally showed ''investors are hoping that stronger economic growth
doesn't necessarily bring a rate hike'' by the Federal Reserve.
The Dow Jones Industrial Average climbed 191.52, or 2.1
percent, to 9467.40, its biggest gain since Feb. 22, led by
American Express Co., IBM and Sears, Roebuck & Co. The Standard &
Poor's 500 Index gained 18.94, or 1.5 percent, to 1246.64, lifted
by oil shares.
The Nasdaq Composite Index rose 27.69, or 1.2 percent, to
2292.89. Almost three stocks rose for every two that fell on the
New York Stock Exchange, and 72 of the S&P 500's 89 industry
groups gained.
Level One Communications Inc. is likely to soar tomorrow
after Intel Corp. said it will buy the maker of chips used in
networking equipment for $2.2 billion in stock. Intel will pay
0.43 share for each share of Level One, an 80 percent premium to
the company's price of 27 1/8 at today's close.
Level One plunged 16 percent today after Timothy Kellis, an
analyst at Adams, Harkness & Hill in Boston, cut his investment
rating on the stock and said a takeover bid from Intel was
unlikely.
Oil Stocks Gain
About 769 million shares changed hands on the NYSE, the most
since Feb. 11.
Oil stocks gained as crude oil surged more than 3 percent to
a two-month high. Declining U.S. inventories signaled a revival
of demand after a mild winter weakened heating oil consumption.
Chevron Corp. rose 1 5/16 to 79 5/16. Exxon Corp. rose 2 1/8 to
67 13/16. Schlumberger Ltd., the second-largest oilfield services
company, rose 4 5/8 to 56 3/8.
Sonders said her fund is overweight in energy: ''There's a
heck of a lot of value in this group.'' She recently added to
holdings in Schlumberger Ltd., Conoco Inc., Exxon Corp., Texaco
Inc. and Enron Corp.
Retail stocks rose after February sales rose 7.6 percent,
more than expected, as shoppers snapped up basic household goods
at Wal-Mart Stores Inc. and other discounters and spring fashions
at clothing chains such as AnnTaylor Stores Corp.
Wal-Mart, the No. 1 retailer, whose same-store sales rose 10
percent, climbed 2 to 89 3/8. AnnTaylor rose 2 3/4 to 41 3/4
after reporting a sales increase of 21 percent.
Sears rose 3 1/8 to 43 3/4 after the second-largest U.S.
retailer named former Safeway Inc. executive Julian Day as
executive vice president and chief financial officer.
Economy's Strength
In another sign that the economy remains strong, first-time
claims for unemployment benefits fell last week to a level not
seen in 10 years.
The stock market's gains this year have been limited by a
string of similar, unexpectedly strong reports that raised
concern that the economy is growing fast enough to prompt the Fed
to raise interest rates.
While corporate profits benefit from a booming economy,
higher borrowing costs tend to be bad for stocks because they
make it more expensive for companies to expand. The yield on the
30-year Treasury bond has risen 60 basis points to 5.70 percent
since the end of last year.
American Express rose 5 3/16 to 113, contributing the most
to the Dow average's gain, after analyst William Ryan at Salomon
Smith Barney rated the travel and financial-services company
''buy'' in new coverage. American Express should deliver at least
8 percent in annual revenue growth and 14 percent growth in
earnings per share as it expands its international card business
and asset management services, Ryan said.
Money Flow
Money has been flowing into American Express for the past
two months, according to data from Bloomberg Analytics. Investors
bought more shares as the stock rose than they sold as the price
declined.
Merrill Lynch & Co. rose 6 11/16 to 84 3/8 after the U.S.
securities firm with the most brokers said it will offer online
trading for some clients for the first time beginning today.
IBM jumped 4 1/4 to 171, accounting for 17 points of the Dow
average's gain. IBM will gain a steady source of sales from the
accord with Dell, while Dell will get access to advanced
technology to use in more sophisticated machines.
After computer shares slumped in recent weeks, ''today's
action is very healthy,'' said Alan Hoffman, who owns shares in
both IBM and Dell and helps manage $6 billion at Value Line Asset
Management. ''These stocks have demonstrated superior long-term
growth dynamics.''
Dell rose 15/16 to 81 7/8 and was the most active stock in
U.S. trading, with more than 41 million shares changing hands.
Dell took a beating in the last few weeks, losing a quarter of
its value from Feb. 2 through yesterday, because of slower sales
growth. IBM was down 15 percent since Jan. 21.
One hundred and two stocks reached 52-week highs on U.S.
exchanges, including AnnTaylor, while 244 fell to 52-week lows. |
