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Stocks rally 6 days before election { May 12 2003 } Original Source Link: (May no longer be active)
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U.S. Stocks Rally on Oil Plunge; Airlines, Retailers Lead Gain
Oct. 27 (Bloomberg) -- U.S. stocks rallied as oil prices tumbled from records, leading to the biggest two-day gains in 18 months for the Dow Jones Industrial Average and the Standard & Poor's 500 Index.
``I wouldn't want to ring the bell and say we've hit the peak in energy prices, but there is a bit of a relief rally,'' said Steven Rhone, who oversees $5.2 billion as chief executive officer of Wentworth, Hauser & Violich in San Francisco. ``Money seems to be coming out of energy today and moving into other areas of the economy.''
Airlines such as AMR Corp. and retailers including Federated Department Stores Inc. climbed as oil's decline eased concern that energy costs will crimp profit growth. Amerada Hess Corp. led oil and gas producers lower.
The Dow average rose 113.55, or 1.2 percent, to 10,002.03. The measure has gained 2.6 percent in the past two days, the best such advance since May 12, 2003. The S&P 500 added 14.31, or 1.3 percent, to 1125.40, rounding off its biggest two-day increase since April 23, 2003.
Veritas Software Corp. and Career Education Corp. reported better-than-expected earnings, helping lift the Nasdaq Composite Index by 41.20, or 2.1 percent, to 1969.99.
More than two stocks rose for every one that dropped on the New York Stock Exchange. Some 1.7 billion shares changed hands on the Big Board, marking the busiest trading this month and a 31 percent increase on the three-month daily average.
Crude Retreats
Stocks erased earlier losses sparked by higher oil prices. Crude oil for December delivery reversed a 0.9 percent advance, plunging 4.8 percent to close at $52.50 a barrel in New York, the biggest slide since June 2. An Energy Department report showed that U.S. stockpiles increased more than expected.
Crude closed at $55.17 yesterday, matching the record on Oct. 22. Before today, oil futures had surged 70 percent this year, while the S&P 500 had slipped 0.1 percent.
The two-day rally may also reflect optimism that the U.S. presidential election, less than a week away, will be a catalyst to lift share prices.
``There's a feeling oil prices have peaked, and also a bit of a relief that the election will be here soon and it'll all be over,'' said Peter Anderson, chief investment officer of RCM Capital Management, which oversees more than $20 billion in assets in San Francisco.
An S&P 500 retail index climbed 2.2 percent. Federated, which owns Macy's and Bloomingdale's, gained $2.05 to $49.55. Sears, Roebuck & Co., the No. 1 U.S. department-store chain, added 98 cents to $33.89.
Airlines
The Amex Airline Index climbed for a fifth day, adding 5 percent. AMR, the parent of American Airlines, gained 55 cents to $7.85. Delta Air Lines Inc., the No. 3 U.S. carrier, rose 32 cents to $4.95. Both companies said fuel costs surged more than 50 percent last quarter.
Hess, the fifth-biggest U.S. oil company, slid $5.22, or 5.9 percent, to $83.85, for the largest drop in the S&P 500. GlobalSantaFe Corp., the world's No. 2 offshore driller, shed $1.05 to $29.60. A gauge of oil-service companies sank 3 percent. Oil and gas producers as a group have climbed 24 percent this year, for the best performance in the S&P 500.
Veritas, the No. 2 maker of data-storage software, advanced 86 cents to $22.39. Third-quarter net income climbed to 22 cents a share as customers signed orders they had previously delayed, the company said. Veritas was expected to earn 21 cents, the average estimate of analysts surveyed by Thomson Financial.
Career Education soared $3.16 to $31.10. The operator of for- profit colleges said in a statement that 2004 net income will be about $1.85 a share, more than the $1.81 average estimate of 15 analysts in a Thomson poll.
Health-Care Shares
Health-care equipment makers and service providers rose 3.1 percent as a group, for the second-biggest gain among the S&P 500's 24 industry groups.
Cardinal Health Inc. surged $8, or 20 percent, to $47.35, for the largest jump in the S&P 500. The drug wholesaler said in a delayed earnings report that profit rose for the fiscal fourth quarter after a restatement.
Thermo Electron Corp. gained $2.40 to $29. The biggest maker of analytical instruments for medical laboratories raised the lower end of its 2004 earnings forecast. Profit from continuing operations, excluding some items, will be $1.23 to $1.25 a share, up from a previous forecast of $1.20 to $1.25.
Zimmer Holdings Inc., the largest maker of artificial hips and knees, added $3.88 to $75.95. The company yesterday gave a 2005 profit forecast that beat the average analyst estimate in Thomson's survey.
Drugmakers
A gauge of drugmakers rallied, gaining 2.6 percent and contributing the most to the S&P 500's rise among 24 industry groups. Eli Lilly and Co. jumped $3.75 to $56.20. The drugmaker that developed Prozac to treat depression agreed to buy an experimental treatment for insomnia, which affects 30 percent to 40 percent of adults in the U.S., from Germany's Merck KgaA.
``We've seen third-quarter earnings be a mixed bag; today, most of the news has been positive, so that's another reason to cheer,'' said Wendell Perkins, who oversees $850 million at the Johnson Family of Funds in Racine, Wisconsin. ``Health care and some technology are where you're seeing some of the better value.'' He recently bought shares of Wyeth.
Procter & Gamble Co. slid $1.43, or 2.7 percent, to $51.78, for the steepest decline in the Dow average. The biggest U.S. household goods maker failed to raise its earnings forecast, saying it will match the current range of analysts' estimates for the second quarter and the fiscal year ending in June.
Competition with rival Unilever is likely to intensify with detergents and other products in large emerging markets such as India, wrote William Pecoriello, an analyst at Morgan Stanley in New York. Procter & Gamble's stock closed at its lowest since March.
Aflac
Aflac Inc., the biggest seller of supplemental health insurance, slid $1.85 to $35.79. The company said sales in Japan fell, causing it to lower the forecast for new policies.
The Russell 2000 Index, which tracks companies with a median market value of about $472 million, rose 1.7 percent to 587.18. The Dow Jones Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, advanced 141.10, or 1.3 percent, to 11,024.45. Based on changes in the Wilshire, the value of stocks increased by $169.3 billion.
Aflac Inc. (AFL US)
Amerada Hess Corp. (AHC US)
AMR Corp. (AMR US)
Cardinal Health Inc. (CAH US)
Career Education Corp. (CECO US)
Delta Air Lines Inc. (DAL US)
Eli Lilly and Co. (LLY US)
Federated Department Stores Inc. (FD US)
GlobalSantaFe Corp. (GSF US)
Procter & Gamble Co. (PG US)
Thermo Electron Corp. (TMO US)
Veritas Software Corp. (VRTS US)
Zimmer Holdings Inc. (ZMH US)
To contact the reporters on this story:
Dune Lawrence in New York at dlawrence6@bloomberg.net.
To contact the editor responsible for this story:
John Melloy in New York at jmelloy@bloomberg.net.
Last Updated: October 27, 2004 17:09 EDT
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