Stocks rise sharply
NEW YORK (AP) - January 18, 2008 The market remains extremely skittish, however. The Dow, having
suffered its worst three-day plunge in over five years, has fallen
to levels not seen since last March.
Some companies are weathering the economic slowdown well - like
International Business Machines Corp., which told Wall Street late
Thursday to raise its 2008 profit estimates for the tech company,
and General Electric Co., which posted a fourth-quarter profit rise
Friday.
But others are struggling. Washington Mutual Inc. reported a
steep loss late Thursday for the fourth quarter, just as Citigroup
Inc. and Merrill Lynch did earlier in the week. With the banking
industry trying to fix its shrinking portfolios and preparing for
more distress in consumer debt, the economy may only have the
government to fall back on.
Federal Reserve monetary policymakers meet Jan. 29-30, and the
market widely expects them to lower the key interest rate, perhaps
by a half-point. Federal Reserve Bank of Richmond President Jeffrey
Lacker said Friday that more rate cuts are "quite possible."
And at 11:50 a.m. EST, President Bush is expected to speak on
the economy and discuss a plan to stimulate the economy through tax
rebates and other strategies. Treasury Secretary Henry Paulson said
Friday on NBC's "Today" show he was confident a temporary
stimulus package can be agreed upon quickly.
In the first hour of trading, the Dow shot up 122.34, or 1.01
percent, to 12,281.55.
Broader stock indicators also rose. The Standard & Poor's 500
index gained 10.44, or 0.78 percent, to 1,343.69, and the Nasdaq
composite index advanced 19.65, or 0.84 percent, to 2,366.55.
Government bonds fell as stocks rallied. The yield on the
benchmark 10-year Treasury note, which moves opposite its price,
rose to 4.66 percent from 4.63 percent late Thursday.
Investors also awaited consumer sentiment data from the
University of Michigan, which is expected to indicate a decline as
worries escalate about a possible recession. Though not a perfect
predictor of consumer spending, the report is closely watched;
consumer spending accounts for about two-thirds of the nation's
economy.
In other corporate news, chip maker Advanced Micro Devices Inc.
on Thursday said its fourth-quarter net loss widened, but the loss
was smaller than Wall Street predicted. AMD surged 69 cents, or
10.9 percent, to $7.03.
IBM rose $4.39, or 4.3 percent, to $105.49 on its strong
outlook.
Washington Mutual rose 42 cents, or 3 percent, to $12.88, as
many investors ahead of the Thursday report anticipated an even
bigger fourth-quarter loss.
On Thursday, a dismal reading on the Philadelphia Fed's
manufacturing index and ratings agency downgrades of bond insurers
sent the Dow tumbling 306 points. Friday, a Bank of America Corp.
analyst cut its ratings on three bond insurers - MBIA Inc., Ambac
Financial Group and Security Capital Assurance Ltd. - to
"Neutral" from "Buy."
MBIA fell 57 cents, or 6.2 percent, to $8.65, after a sharp drop
Thursday.
Ambac rebounded from Thursday's drop, though, rising 77 cents,
or 12.3 percent, to $7.01.
The dollar was mixed against most major currencies, while gold
rose.
Crude oil futures rose 28 cents to $90.41 a barrel in pre-market
trading on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 1.17, or 0.17
percent, to 681.74.
In overseas trade, Japan's Nikkei stock index rose 0.56 percent
and Hong Kong's Hang Seng index advanced 0.35 percent. In Europe,
London's FTSE 100 rose 1.31 percent, Frankfurt's DAX rose 0.63
percent and Paris' CAC gained 0.55 percent.
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On the Net:
New York Stock Exchange: http://www.nyse.com
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