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Stocks rally big 7 days before election Original Source Link: (May no longer be active)
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aLXQ21emT1_c&refer=homehttp://quote.bloomberg.com/apps/news?pid=10000006&sid=aLXQ21emT1_c&refer=home
U.S. Stocks Rise; Dow Average Records Biggest Rally in 5 Months
Oct. 26 (Bloomberg) -- U.S. stocks rose, led by insurance companies such as American International Group Inc., on optimism that Marsh & McLennan Cos.' response to claims of kickbacks and rigged bids will help resolve an investigation of the industry.
The Dow Jones Industrial Average had its biggest gain in almost five months.
``It's a relief rally,'' said Joseph Williams III, who manages the $200 million Commerce Growth Fund in Kansas City, Missouri. The situation at Marsh, he said, suggests New York Attorney General Eliot Spitzer's probe ``might not be as bad as what was feared'' for the industry.
Insurers' advance helped stocks overcome a rebound in oil prices that sent crude back above $55 a barrel in New York trading, along with a bigger-than-expected drop in a measure of consumer confidence.
The Dow average climbed 138.49, or 1.4 percent, to 9888.48, its biggest increase since June 7. General Electric Co., which said it is ``on track'' to meet a forecast of double-digit earnings growth in 2005, helped lift the measure. The Standard & Poor's 500 Index rose 16.29, or 1.5 percent, to 1111.10. The Nasdaq Composite Index added 14.75, or 0.8 percent, to 1928.79.
Five stocks gained for every two that dropped on the New York Stock Exchange. Some 1.62 billion shares changed hands on the Big Board, a fifth more than the three-month daily average.
Clouds
Spitzer's investigation, record oil prices, and doubts about the outcome of next week's U.S. presidential election have clouded the outlook for stocks, said Edwin Miska, who manages about $1 billion for First Investors Management Co. in New York.
``As they individually lift, we will see the market behave a little bit better,'' Miska said.
Crude oil for December delivery rose 1.2 percent to match a record $55.17 a barrel in New York as refineries were expected to increase production following seasonal maintenance, reducing supplies. Futures erased a 1.3 percent drop.
The Conference Board's consumer confidence index fell to 92.8 in October from a revised 96.7 the previous month. Economists in a Bloomberg News survey expected a reading of 94.
Marsh & McLennan
Marsh & McLennan, the world's largest insurance brokerage, added $2.45 to $28.87. A day after Chief Executive Jeffrey Greenberg resigned, his successor, Michael Cherkasky, created a compliance unit and pledged to return money to clients in a move to settle claims of kickbacks and rigged bids.
The action taken may help jumpstart negotiations between the insurance industry and Spitzer. A gauge of insurers led the S&P 500's gain, climbing 5.3 percent. It was also the measure's largest increase in two years.
American International, the No. 1 insurer, added $4.23 to $60.33. Aon Corp., the No. 2 insurance broker, rose $1.90 to $21.54. MetLife Inc., the second-largest U.S. life insurer, gained $1.69 to $36.75.
Health insurers, which fell last week on concern Spitzer's investigation would extend to them, climbed. WellPoint Health Networks Inc.'s better-than-expected earnings also helped the group. Aetna Inc., the third-biggest U.S. health insurer, advanced $4.49 to $89.30. Anthem Inc. jumped $3.84 to $76.84. Humana Inc. increased 57 cents to $18.63.
WellPoint Earnings
WellPoint said profit climbed to $1.97 a share, 6 cents more than the average analyst estimate in a Thomson Financial survey. The No. 2 U.S. health insurer added 600,000 members in California, Georgia and Texas. The shares added $4.67 to $92.90.
General Electric advanced 73 cents to $33.63. The world's largest company by market value reiterated its earnings forecast of $1.57 to $1.60 a share for 2004 and 10 percent to 15 percent growth in 2005.
Zimmer Holdings Inc. soared $4.17 to $72.07. The biggest maker of artificial hips and knees said third-quarter profit rose 50 percent to $127.9 million on increased sales of orthopedic implants and spinal products. The company expects 2005 profit, excluding some items, to be at least $2.80, more than the average analyst estimate of $2.79.
Stocks closed at the day's highs amid buying tied to AT&T Wireless Services Inc.'s removal from the S&P 500, reflecting Cingular Wireless LLC's completion of a $41 billion takeover of the mobile-phone company.
Index Funds
Funds that track the index had to buy about $3 billion of shares in other S&P 500 members to adjust for the change, said Peter Boockvar, a Miller Tabak & Co. strategist. The estimate reflects the fact that AT&T Wireless's replacement, CIT Group Inc., is valued at only $8.5 billion.
SBC Communications Inc., which owns 60 percent of Cingular, fell 24 cents to $24.75. BellSouth Corp., owner of the rest, lost 39 cents to $26.03.
CIT, the biggest publicly traded U.S. leasing company, rose $2 to $40.10. Laboratory Corp. of America Holdings advanced $1.56 to $44.56 as the No. 2 U.S. medical laboratory company will replace SouthTrust Corp. in the S&P 500.
The Dow Jones Transportation Average climbed 1.6 percent to 3435.61, a five-year high. Delta Air Lines Inc., seeking to avert a bankruptcy filing, led the advance after arranging $600 million in new financing and postponing the repayment of $135 million in debt. The stock jumped 85 cents to $4.63.
Qualcomm
Qualcomm Inc., the No. 2 maker of mobile-phone chips, shed $1.64, or 4 percent, to $39.50, for the third-steepest drop in the S&P 500. Morgan Stanley analyst Louis Gerhardy cut the stock's rating to ``underweight'' from ``equal-weight,'' saying Qualcomm's earnings growth may slow in 2005 as operating expenses rise and consumers replace handsets more slowly.
Flextronics International Ltd. lost 87 cents to $11.67. The largest maker of electronics for other companies said it expects third-quarter profit, excluding some costs, of as much as 21 cents a share. Analysts expected 22 cents, on average.
DuPont Co. retreated 78 cents, or 1.9 percent, to $41.40, for the biggest slide in the Dow average. The No. 2 U.S. chemical maker said higher energy costs in the fourth quarter will reduce profit by 10 cents a share.
Coach Inc., the largest U.S. seller of luxury-leather goods, said first-quarter earnings climbed 60 percent, beating Thomson's average analyst estimate, on sales of new Signature handbags. The company also increased its annual profit forecast. The shares added $2.84 to $44.56.
QQQs, Futures
The S&P 500 shares, called Spiders, added $1.68 to $111.54. Nasdaq-100 tracking shares, known by their QQQ symbol, rose 20 cents to $35.82.
S&P 500 futures expiring in December jumped 16.30 to 1111.60 on the Chicago Mercantile Exchange. Nasdaq-100 Index futures gained 8.50 to 1443.50.
The Russell 2000 Index, which tracks companies with a median market value of about $472 million, rose 1 percent to 577.61.
The Dow Jones Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, advanced 148.36, or 1.4 percent, to 10,883.35. Based on changes in the Wilshire, the value of stocks increased by $178 billion.
Aetna Inc. (AET US)
American International Group Inc. (AIG US)
Anthem Inc. (ATH US)
Aon Corp. (AOC US)
BellSouth Corp. (BLS US)
CIT Group Inc. (CIT US)
Coach Inc. (COH US)
DuPont Co. (DD US)
Flextronics International Ltd. (FLEX US)
General Electric Co. (GE US)
Humana Inc. (HUM US)
Laboratory Corp. of America Holdings (LH US)
Marsh & McLennan Cos. (MMC US)
MetLife Inc. (MET US)
Qualcomm Inc. (QCOM US)
SBC Communications Inc. (SBC US)
WellPoint Health Networks Inc. (WLP US)
Zimmer Holdings Inc. (ZMH US)
To contact the reporter 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 26, 2004 16:45 EDT
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