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June 12, 2007 > US stocks strike higher

US stocks strike higher

By Tim Paradis, AP Business Writer

NEW YORK (AP), Jun 08 _ U.S. stocks snapped a three-day losing streak Friday, letting investors recoup some of the losses incurred during a week in which concerns about interest rates roiled Wall Street. In Friday's session, the Dow Jones industrial average showed its biggest point gain in more than two months, and the Standard & Poor's 500 index crossed back above the 1,500 mark.

After briefly dipping into negative territory, stocks gained steam Friday as yields on the U.S. Treasury's 10-year note backed off five-year highs of 5.25 percent. As stocks closed Friday, the yield on the benchmark note hovered around 5.11 percent.

Yields, which move in the opposite direction as bond prices, jumped during the week after investors grew less optimistic that the Federal Reserve would lower short-term interest rates. A move above the 5 percent level Thursday in the 10-year bond yield sent stock market investors rushing to bonds.

On Friday, investors moved back into stock.

``The fact that it rallied the last two hours of the day showed people were coming in buying what they thought were pretty good bargains,'' said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research.

The Dow industrials rose 157.66, or 1.19 percent, to 13,424.39.

Broader stock indicators also jumped. The S&P 500 advanced 16.95, or 1.14 percent, to 1,507.67. It was just last month that the index crossed above the 1,500 mark for the first time in seven years.

The Nasdaq composite index rose 32.16, or 1.27 percent, to 2,573.54.

Friday's gains couldn't offset all the losses for a week that started out with fresh closing records for the Dow and the S&P 500. The Dow fell 1.78 percent for the week, while the S&P 500 lost 1.87 percent and the Nasdaq gave up 1.54 percent. Before stocks regained some lost ground Friday, the major indexes had each fallen nearly 3 percent in what was the biggest three-session decline since a short-lived pullback that began Feb. 27.

``It definitely was a down week, but investors tend to have a short-term memory,'' Detrick said. ``They just remember the good Friday. This three-day dip might be nothing more than a solid buying opportunity.''

He added that the coming week brings expiration of options contracts and that stocks have managed gains in 12 of the 17 such weeks since the start of last year.

Stocks received a boost Friday as oil prices fell after a cyclone spared major oil installations in the Gulf of Oman, easing supply concerns. Light, sweet crude for July delivery settled down $2.17 at $64.76 per barrel on the New York Mercantile Exchange.

In addition, a narrowing of the U.S. trade deficit injected some calm into the markets. The Commerce Department reported that the gap narrowed by 6.2 percent to $58.5 billion (euro43.82 billion) in April, after widening to a six-month high of $63.9 billion (euro47.87 billion) in March.

The week's swings stirred concerns that an extended rise in interest rates could cork the huge flow of takeover activity that, according to financial data provider Dealogic, has been on pace to beat last year's record $4 trillion (euro3 trillion). The flurry of acquisitions has helped push stocks higher in recent months.

``We haven't had any major buyouts in the last week, and I think it's directly related to the higher interest rates we've seen,'' Detrick said.

While companies and investors might have felt less acquisitive than in recent months, some dealmakers saw fit to plow ahead.

Biomet Inc., a maker of orthopedic products, said Thursday a private equity consortium upped its bid for the company by 4.5 percent from $10.9 billion (euro8.17 billion) to $11.4 billion (euro8.54 billion). Biomet on Friday slipped 7 cents to $45.49.

Tyco International Ltd. said its board has formally approved the industrial conglomerate's breakup into three companies through a tax-free distribution to shareholders. Tyco rose $1.17, or 3.6 percent, to $33.80.

In other corporate news, McDonald's Corp. rose $1.20, or 2.4 percent, to $51.41 after the world's largest fast-food chain said its global same-store sales, or sales at restaurants open at least 13 months, rose 8.7 percent in May.

National Semiconductor Corp. jumped $3.79, or 15 percent, to $29.58 after increased orders and stronger profit margins helped the chipmaker post better-than-expected fiscal fourth-quarter earnings.

The dollar rose against other major currencies, while gold prices fell.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.98 billion shares compared with a heavy 3.56 billion Thursday.

The Russell 2000 index of smaller companies rose 9.99, or 1.21 percent, to 835.31.

After U.S. stocks' big sell-off on Thursday, Japan's Nikkei stock average fell 1.52 percent, Hong Kong's Hang Seng Index dropped 1.4 percent, Singapore's stock market lost 1.2 percent, and Australian stocks declined 1.3 percent. China's benchmark Shanghai Composite Index rose 0.6 percent, however, its fourth straight gain.

In European trading, Britain's FTSE 100 ended flat, Germany's DAX index fell 0.37 percent, and France's CAC-40 fell 0.12 percent.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

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