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Stocks rally to 4 year high after 2006 new years Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=a5L77KZZj2a8&refer=homehttp://quote.bloomberg.com/apps/news?pid=10000006&sid=a5L77KZZj2a8&refer=home
U.S. Stocks Rally to Four-Year Highs; Best Buy, Yahoo Advance
Jan. 6 (Bloomberg) -- U.S. stocks resumed a New Year's rally, pushing prices to the highest levels since 2001, after a report on December job growth suggested the economy can sustain an expansion.
``The rally is justified,'' said Eric Thorne, who helps oversee $2.3 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania. ``The economy continues to be strong enough to keep corporate earnings growth strong, but not too strong that we'll have any sort of intense inflation worries.''
The advance gave the Standard & Poor's 500 Index, Nasdaq Composite Index and Dow Jones Industrial Average their best annual starts in three years.
Best Buy Co., the largest electronics retailer, led today's gain after sales growth last month boosted quarterly earnings to the top of its forecast. Yahoo! Inc. and Google Inc. climbed as Goldman, Sachs & Co. increased share-price estimates.
The S&P 500 added 11.97, or 0.9 percent, to 1285.45. The Nasdaq was up 28.75, or 1.3 percent, at 2305.62. Both indexes closed at the highest since May 2001. The Dow average gained 77.16, or 0.7 percent, to 10,959.31, a level not seen since June 2001.
The indexes rose 3 percent, 4.5 percent and 2.3 percent, respectively, this week, which included the year's first four trading days. The Nasdaq's weekly gain was its best since August 2004 as computer-related shares that account for almost half its value advanced. U.S. markets were closed Jan. 2 for the New Year holiday.
Jobs Report
The 108,000 jobs created last month was less than the 200,000 economists expected in a Bloomberg News survey. November's increase of 305,000 was more than the 215,000 originally reported. That brought the two-month average to more than 200,000. The unemployment rate fell to 4.9 percent from 5 percent.
The Federal Reserve on Dec. 13 raised its key lending rate for the 13th consecutive time to 4.25 percent. Minutes from that meeting suggested the central bank may soon be done lifting rates.
``We've got a pretty solid economy, and the Fed stops tightening, I think that's one of the headwinds that would be eliminated from the market place,'' said Allen Ashcroft, who manages $200 million at MTB Investment Advisors in Baltimore. ``We could be in for a pretty good first quarter.''
Best Buy
Best Buy, the No. 1 U.S. consumer electronics retailer, said December same-store sales rose 5.8 percent and will help push fourth-quarter earnings growth to 11 percent. RBC Capital Markets analyst Scot Ciccarelli estimated same-store sales gains of 3.5 percent. The shares added $3.55, or 8.2 percent, to $47.05 for the second-best rally in the S&P 500.
Yahoo, the owner of the most-visited Web site, gained $1.68 to $43.21. The company ``remains the broadest beneficiary of the global Internet secular growth'' because of its gain in ``branded'' advertising, paying subscribers, and the company's development of entertainment offerings such as music, wrote Goldman analysts including Anthony Noto. Goldman expects the stock to rise to $50.
Separately, Yahoo Chief Executive Officer Terry Semel outlined plans for products that will let consumers access the company's services from televisions and cell phones in an attempt to get customers to spend more time on the Web. Semel demonstrated the features today at the Consumer Electronics Show in Las Vegas.
Google Gains
Google, the most-used Internet search engine, surged $14.42 to a record $465.66. Goldman increased its price estimate to $500 from $400 based on earnings. Google is up 12 percent this year after upgrades or increases in target prices from at least three Wall Street firms.
More than three stocks rose for every one that fell on the New York Stock Exchange. Almost 1.78 billion shares changed hands on the Big Board, 9.4 percent more than the three-month daily average.
International Business Machines Corp. jumped $2.45, or 3 percent, to $84.95 for the top performance in the Dow average. The world's biggest computer company announced it will save $3 billion over four years by restructuring its U.S. pension plans. The initiative will cost $270 million in the fourth quarter, IBM said. IBM's pension deficit, which was $7.4 billion at the end of 2004, ranked fourth-highest in the U.S.
Microsoft
Not all technology stocks rose. Microsoft Corp., the world's No. 1 software maker, ended the day down 8 cents at $26.91 after earlier falling as much as 1.9 percent. Credit Suisse First Boston analysts including Jason Maynard lowered their rating to ``neutral'' from ``outperform,'' saying Microsoft's expansion is taking place mainly in emerging markets, where average selling prices are lower, and is limited by consumers' switch from personal computers to other devices.
Ashland Inc. rallied $5.05 to $64.11 after the largest U.S. road builder said earnings in the first quarter ended December 31 exceeded the top analyst estimate of 71 cents a share. The stock's 8.6 percent climb was the biggest in the S&P 500.
A gauge of producers of raw materials advanced 1.2 percent.
A jump in oil prices didn't dent the rally as energy stocks buoyed indexes. Crude oil for February delivery added 2.3 percent to $64.21 a barrel in New York on signs that economic growth will push energy demand higher worldwide.
A measure of energy shares gained 2.3 percent for the top gain among 10 industry groups in the S&P 500. Noble Corp., the second-largest offshore oil and gas driller, increased $3.85 to $77. Exxon Mobil Corp., the biggest publicly traded oil company, rose $1.15 to $59.43 and was the top contributor to the S&P 500's advance.
Salesforce.com
Salesforce.com Inc., which sells Internet-based customer- management software, added $3.79 to $39.85. Salesforce.com will accelerate customer growth, allowing it to exceed its own estimate for fiscal 2007 per-share profit of 29 cents on sales of $500 million, according to CSFB's Maynard. He upgraded Salesforce.com's rating to ``outperform'' from ``neutral.''
S&P 500 shares, called Spiders, jumped $1.06 to $128.44. Nasdaq-100 tracking shares, known by their QQQQ symbol, rose 76 cents to $42.68.
S&P 500 futures expiring in March climbed 10.50 to 1291.80 on the Chicago Mercantile Exchange. Nasdaq-100 Index futures rallied 25 to 1748.
The Russell 2000 Index, a benchmark for companies with a median market value of $569 million, advanced 1.1 percent to 699.39. The Dow Jones Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, rose 124.64, or 1 percent, to 12,888.29. Based on the changes in the Wilshire, the value of stocks surged by $155.8 billion.
Ashland Inc. (ASH US)
Best Buy Co. (BBY US)
Exxon Mobil Corp. (XOM US)
Google Inc. (GOOG US)
International Business Machines Corp. (IBM US)
Microsoft Corp. (MSFT US)
Noble Corp. (NE US)
Salesforce.com Inc. (CRM US)
Yahoo! Inc. (YHOO US)
To contact the reporter on this story:
Dune Lawrence in New York at dlawrence6@bloomberg.net.
Last Updated: January 6, 2006 17:08 EST
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