Stocks rise following economic readings

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NEW YORK -- Wall Street closed out a bumpy week with a moderate advance Friday as tech stocks charged higher on takeover news and other sectors gained on data that indicated the economy is expanding at a healthy pace. The major indexes managed to post gains for the week.

Oracle Corp.’s bid for BEA Systems Inc. helped prop up technology stocks, and gave investors renewed hope that acquisition activity is picking up again after the uncertainty of the summer’s credit crisis. Corporate news also boosted some blue chip names: McDonald’s Corp. posted higher-than-expected sales and General Motors Corp. said sales in its Latin America, Africa and Middle East region jumped in the third quarter.

Amid the economic data Wall Street mined Friday for signals about the health of the economy, the government reported that retail sales showed a stronger-than-expected gain last month and that wholesale prices jumped in September amid an increase in food and energy costs. Business inventories increased, while consumer sentiment slipped.

“The data seemed to reinforce that the economy is slowing, but perhaps not as precipitously as feared. And that may put the Fed on hold in October,” said Derrick Wulf, portfolio manager at Dwight Asset Management Company. He was referring to the next interest-rate decision by Federal Reserve policymakers, who are scheduled to meet Oct. 30-31.

The Dow Jones industrial average rose 77.96, or 0.56%, to 14,093.08.

Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 7.39, or 0.48%, to 1,561.80. The tech-dominated Nasdaq composite index rose 33.48, or 1.21%, to 2,805.68.

The advance came after both the Dow and S&P fell two straight days as investors worried about third-quarter earnings season, and what companies might say about the economy. Investors were disappointed by reports from Alcoa Inc. and General Electric Co.and warnings from names like Chevron Corp. and International Paper Co.

But stocks were kept afloat during the week by the release of minutes from the Federal Reserve’s Sept. 18 meeting. Investors interpreted comments from Fed governors as being receptive to a rate cut.

For the week, the Dow was up 0.19%; the S&P 500 rose 0.27% and the Nasdaq gained 0.91%.

Bonds were slightly lower Friday as fixed-income investors held their positions ahead of the weekend. The yield on the benchmark 10-year Treasury note, which moves inversely to the price, was up at 4.68% from 4.66% late Thursday.

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

Light, sweet crude rose 61 cents to $83.69 per barrel on the New York Mercantile Exchange. Oil futures moved above $84 per barrel to a fresh trading and settled at a record as well amid concerns that supplies won’t meet demand in the fourth quarter.

Economic readings appeared to give a boost to stocks. The Commerce Department reported that retail sales rose 0.6% in September from August was double the growth economists had been expecting. The report came a day after many national retailers reported seeing sluggish demand in September.

The Labor Department said wholesale prices rose 1.1% in September. Excluding the often volatile categories of food and energy, wholesale prices edged up by a moderate 0.1%.

Inventories held by businesses on shelves and backlots rose 0.1% in August, less than the 0.3% gain analysts had been expecting.

Consumer sentiment fell in October, according to the Reuters/University of Michigan consumer sentiment reading for mid-October.

Robert Streed, portfolio manager of Northern Trust Select Equity Fund in Chicago, said another reason behind Friday’s drive higher is renewed optimism about corporate acquisitions.

“This is psychologically important because it shows insiders see value in acquiring companies,” Streed said. “It also injects cash into the system.”

Oracle, the business software maker, confirmed it offered to buy BEA Systems for more than $6.66 billion. Oracle said it sent a letter to the software maker’s board offering $17 per share, a 25% premium over Thursday’s closing price of $13.62. BEA surged $5.20, or 38%, to $18.82, while Oracle fell 2 cents to $22.44.

In other corporate news, McDonald’s said its global same-store sales -- or sales at stores open at least a year -- rose a stronger-than-expected 5.9% in September. The nation’s No. 1 hamburger chain also forecast earnings for the quarter well ahead of Wall Street expectations. McDonald’s rose 77 cents to $57.02.

GM rose $2.65, or 6.6%, to $42.64 after posting a 22% increase in sales in regions such as Latin America. The move comes after shares of the automaker jumped Thursday following a decision by union members to ratify a new contract with the automaker.

GE’s third-quarter earnings rose 14% as its energy and transportation businesses did well. Many investors regard GE as a bellwether for the U.S. economy because of the conglomerate’s array of businesses -- from finance to engines to NBC Universal. GE fell 57 cents to $41.03.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.71 billion shares, compared to 3.82 billion on Thursday.

The Russell 2000 index of smaller companies rose 6.19, or 0.74%, to 841.17.

Overseas, Japan’s Nikkei stock average closed down 0.73%. Britain’s FTSE 100 rose 0.09%, Germany’s DAX index rose 0.09%, and France’s CAC-40 fell 0.32%.

The Dow Jones industrial average ended the week up 27.07, or 0.19%, at 14,093.08. The Standard & Poor’s 500 index finished up 4.21, or 0.27%, at 1,561.80. The Nasdaq composite index ended up 25.36, or 0.91%, at 2,805.68.

The Russell 2000 index finished the week down 3.71, or 0.44%, at 841.17.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended Friday at 15,789.30, up 65.61, or 0.42%, for the week. A year ago, the index was at 13,657.60.
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