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March 21, 2006 > Stocks rise on upbeat industrial data

Stocks rise on upbeat industrial data

by Christopher Wang

NEW YORK (AP), March 17 - Lower oil prices and a rebound in manufacturing activity helped Wall Street extend its rally Friday, lifting the Dow Jones industrials and the Standard & Poor's 500 index to a fresh five-year high for the fourth straight session. The major indexes each gained about 2 percent for the week.

Investors cheered a Federal Reserve report that the nation's industrial production grew 0.7 percent in February after sliding 0.3 percent the month before, with the onset of cold weather driving an upswing in utilities output.

The promising economic report overshadowed downbeat earnings news from General Motors Corp., which said its 2005 loss was $2 billion more than originally reported. Insurance firm American International Group Inc. also posted a steep drop in profit from settling regulatory charges.

But stocks' gains were limited as the day's headlines did little to address Wall Street's persistent worries about inflation and more interest rate hikes from the Fed, said Ken Tower, chief market strategist for Schwab's CyberTrader.

"I think the question the market is struggling with is whether we are concerned about inflation and too strong an economy, or if the Fed is raising interest rates too much and cooling things off," Tower said. "So we have a little pause in the market today as it tries to work this question out."

At the close of trading, the Dow climbed 26.41, or 0.23 percent, to 11,279.65, its highest level since reaching 11,301.74 on May 21, 2001.

Broader stock indicators also gained ground. The S&P 500 index rose 1.92, or 0.12 percent, to 1,307.25 _ its highest close since it reached 1,309.38 on May 22, 2001 _ and the Nasdaq composite index added 6.92, or 0.3 percent, to 2,306.48.

Bonds cooled following this week's rally, with the yield on the 10-year Treasury note edging up to 4.67 percent from 4.64 percent late Thursday. The dollar was mostly higher against most major currencies, and gold prices inched upward.

Trading was volatile amid sharply higher volume as four types of options and futures contracts expired, known as the quarterly "quadruple witching" day. Advancing issues led decliners by 6 to 5 on the New York Stock Exchange, where preliminary consolidated volume of 2.66 billion shares beat the 2.34 billion shares that changed hands on Thursday.

Crude futures pulled back from this week's after the Organization of Petroleum Exporting Countries cut its projected global demand by 110,000 barrels a day. A barrel of light crude fell 81 cents to settle at $62.77 on the New York Mercantile Exchange.

The market also weighed a mixed assessment of consumers from the University of Michigan. Its consumer-sentiment index for March came in at 86.7, unchanged from February but below economists' prediction of 88.

Friday's advance left the major indexes with sturdy gains this week as traders showed optimism about recent economic data on inflation, housing and retail sales. For the week, the Dow rose 1.84 percent, the S&P 500 gained 2 percent and the Nasdaq ended 1.96 percent higher.

But with few reports to guide it next week, Wall Street will likely focus on energy prices and any clues from companies about their first-quarter results, said Michael Sheldon, chief investment strategist for Spencer Clarke LLC.

"One thing worth noting is that we saw several positive pre-announcements from economically sensitive companies," such as DuPont Co. and Union Pacific Inc., Sheldon said.

Analysts also said that while the Dow and the S&P 500 are pressing past multiyear highs, the Nasdaq is still about 30 points off its January record of 2,331.36. Whether the tech sector can close that gap and contribute to the market's gains could determine how long this rally will continue, Tower said.

GM further rattled auto investors with news that its exposure to Delphi Corp.'s bankruptcy could be 56 percent more than originally estimated, and that costs to cover plant closings would be $500 million more. The automaker revised its 2005 loss to $10.6 billion, up $2 billion from its earlier estimate. GM fell $1.09 to $21.13.

AIG's quarterly profit was a fourth of its year-ago earnings, as it took more than $2 billion in charges to cover a settlement with state and federal regulators. Damage from last year's hurricanes also hurt its results, the company said. AIG dropped 42 cents to $68.82.

Elsewhere in the sector, The Wall Street Journal said St. Paul Travelers Cos. was negotiating a takeover of Swiss insurance firm Zurich Financial Services. Analysts were skeptic of an outright acquisition and said a merger of equals was more likely. St. Paul lost $.41 to $41.55.

Entertainment company Viacom Inc. is selling the film library of recently acquired DreamWorks SKG Inc., maker of blockbuster hits like "Gladiator" and "Saving Private Ryan," for $900 million. Viacom rose 60 cents to $38.97.

Internet search firm Google Inc. expects its 2006 capital expenditures to be significantly greater than the $838.2 million it spent last year, the company said in a regulatory document filed Thursday. Google added $1.02 to $339.79.

The Russell 2000 index of smaller companies advanced 2.30, or 0.31 percent, to 746.09.

Overseas, Japan's Nikkei stock average gained 1.51 percent. Britain's FTSE 100 rose 0.1 percent, Germany's DAX index slipped 0.26 percent, and France's CAC-40 was higher by 0.29 percent.

The Dow Jones industrials ended the week up 203.31, or 1.84 percent, finishing at 11,279.65. The S&P 500 index rose 25.67, or 2 percent, to close at 1,307.25.

The Nasdaq gained 44.44, or 1.96 percent, to end at 2,306.48.

The Russell 2000 index closed the week up 19.75, or 2.72 percent, at 746.09.

The Dow Jones Wilshire 5000 Composite Index - a free-float weighted index that measures 5,000 U.S. based companies - ended the week at 13,177.06, up 270.04 points from last week. A year ago, the index was 11,745.27.

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