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US Stocks Rise, Aided By United Tech, Texas Instruments January 23, 2007

Posted by notapundit in Economic News.
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NEW YORK (Dow Jones)–Stocks advanced as optimism about earnings and outlooks from United Technologies, Texas Instruments and Burlington Northern Santa Fe outdistanced downbeat deliveries from Alcatel-Lucent, DuPont and Johnson & Johnson.

The Dow Jones Industrial Average gained 56.64, or 0.45%, to 12533.80, its first advance in five sessions. The Nasdaq Composite rose 0.34, or 0.01%, to 2431.41. The Standard & Poor’s 500 Index added 5.04, or 0.35%, to 1427.99.

“We had the Conference Board’s index of leading economic indicators reinforce the fact that the economy is strong enough to avoid concerns of recession but not so strong to incite fears of inflation and further Fed tightening,” said Bill Strazzullo, chief market strategist at Bell Curve Trading.

United Technologies rose $2.05, or 3.2%, to $66.14, the best gainer on the Dow industrial average. Strength in aerospace and commercial construction businesses helped propel a 38% jump in net income. The conglomerate also backed its 2007 earnings forecast for profit in the range of $4.05 to $4.20 a share.

Texas Instruments gained 1.01, or 3.5%, to 29.60. Investors bet that soft demand for cellphone chips will soon improve and bought shares despite the mobile handset chip maker producing fourth-quarter profit and revenue that were just modestly higher. Texas Instruments also said it will cut 500 jobs and close an older factory to reduce costs.

Burlington Northern Santa Fe gained 2.97, or 3.9%, to 80.10. The railroad operator said its fourth-quarter earnings rose 21%, boosted by higher freight and coal revenues. The news set off a rally among other rail companies, with CSX rising 1.56, or 4.4%, to 36.66, Union Pacific advancing 2.91, or 3.1%, to 98.22 and Norfolk Southern Corp. gaining 1.62, or 3.1%, to 53.73.

Alcatel-Lucent’s American depositary receipts dropped 1.04, or 7.3%, to 13.15, the third biggest percentage decline on the NYSE. The telecommunications equipment maker – created through an $11.6 billion merger in November – warned of a fourth-quarter slump in operating profit and said full-year 2006 revenues would come in close to 2005 levels, as heightened competition around the globe squeezed sales.

Johnson & Johnson dropped 68 cents, or 1%, to 66.50. The maker of Band-Aids, Neutrogena and Tylenol recorded a 3.5% earnings increase amid strong drug sales. But sales of its Cypher drug-coated stents fell 15% amid a softening market.

Dow industrial DuPont lost 43 cents, or 0.86%, to 49.67. Fourth-quarter net income surged, but the strength came on one-time gains, a lower-than-expected base tax rate and a rebound from year-earlier plant disruptions caused by Gulf Coast hurricanes. The chemical maker also said that demand from the housing and automotive markets in the first half of 2007 is expected to be down from a year ago and reaffirmed full-year earnings guidance that is below analysts’ projections.

Volume on the New York Stock Exchange was 1.67 billion shares. Up volume beat down by 1.11 billion to 643 million, and stocks that rose in value exceeded those that fell, 2,186 to 1,137.

The final Dow Jones Industrial Average close was 12533.80, up 56.64. On the New York Stock Exchange, there were 2,186 issues advancing, 1,137 declining and 165 unchanged.

NYSE volume totaled 1,730,214,400 shares, compared with 1,544,859,950 Monday.

The NYSE Composite Index was 9199.73, up 68.81. The average price per share rose by 34 cents.

Energizer Holdings leapt 8.20, or 11%, to 83.80, the Big Board’s third biggest percentage gainer. The consumer products company, whose brands include Schick and Wilkinson Sword razors in addition to its trademark batteries, posted higher fiscal first-quarter income, as solid sales of batteries and Quattro razors and blades helped offset rising costs for zinc and other raw materials.

Dow industrial Pfizer saw its sell-off accelerate, as shares dropped 58 cents, or 2.2%, to 26.37. Shares of the world’s largest drug maker by sales fell 1% on Monday when it offered a lukewarm revenue outlook and saying it will cut about 10,000 jobs, or about 10% of its world-wide work force, as it battles to offset impacts from losing patent exclusivity for its drugs.

Temple-Inland gained 3.14, or 6.8%, to 49.64. Billionaire investor Carl Icahn reported a 6.73% stake in the forest products, corrugated packaging, real-estate and financial services company and suggested that it spin off one or more of its component businesses.

Gap lost 64 cents, or 3.2%, to 19.26. Ending months of speculation, the apparel retailer responded to its sliding sales and falling profits by announcing that Chief Executive Paul Pressler, who ultimately failed to make the company’s big brands fashionable, is leaving, effective immediately.

UAL (Nasdaq) fell 3.94, or 8.1%, to 44.81. The parent of United Airlines reported a $61 million net loss for the fourth quarter, as revenue suffered from storm-related flight cancellations.

Apple (Nasdaq) dropped 1.09, or 1.3%, to 85.70. Chief Executive Steve Jobs was questioned last week by the Justice Department and the Securities and Exchange Commission concerning stock options, the San Francisco Chronicle reported.

AK Steel Holding gained 1.63, or 9.7%, to 18.40. The steelmaker’s fourth-quarter loss widened to $49.3 million, or 45 cents a share, from $41.5 million, or 38 cents a share, a year earlier, but the company forecast strong first-quarter steel prices.

Research In Motion rose 5.55, or 4.6%, to 126.75 on the Nasdaq. Goldman Sachs had positive comments about the maker of the BlackBerry hand-held communications device, expecting, among other things, that more carriers will increase subsidies and reduce monthly service costs to drive broader consumer adoption.

Nasdaq Stock Market lost 41 cents, or 1.2%, to 33.51 on the Nasdaq. London Stock Exchange Group PLC said it is time for the U.S. securities exchange “to shut up or put up” with an offer price it can recommend to shareholders, indicating that it is receptive to a takeover by the U.S. exchange operator at the right price.

Jacobs Engineering Group jumped 7.39, or 9.2%, to 87.85. The Pasadena, Calif., provider of technical, professional and construction services reported a fiscal first-quarter profit of $61.3 million, or $1.01 a share, up from a year-ago profit of $43 million, or 72 cents a share, as revenue rose to $2 billion from $1.7 billion with a backlog totaling $10.4 billion as of Dec. 31. Wall Street’s consensus estimate was for earnings of 89 cents a share. The company lifted its outlook for fiscal year 2007 to earnings of between $4 and $4.30 a share. compared with analysts’ estimates of $3.96.

Bank of America shed 33 cents, or 0.62%, to 53.32. The giant banking company’s acquisitive streak helped plump its profits at the end of last year, but analysts are concerned that a challenging interest-rate market may yet serve up a curveball.

AMR lost 3.39, or 8.5%, to 36.70. The parent of American Airlines priced its offering of 13 million new shares at $38.70 each.

Archer Daniels Midland gained 81 cents, or 2.6%, to 32.63. The country’s largest ethanol producer advanced on hopes of positive comments about renewable fuels in President Bush’s State of the Union address Tuesday.

Kraft Foods dropped 60 cents, or 1.7%, to 35.31. The food and beverage company said it is selling its hot cereals business, including the Cream of Wheat and Cream of Rice brands, to B&G Foods for about $200 million. Small-cap B&G lost 28 cents, or 1.3%, to 21.27.

Under Armour advanced 2.33, or 5%, to 49.41. Credit Suisse upgraded shares to outperform from neutral, citing an increased conviction that the apparel maker is emerging has one of the premier global athletic brands.

Chicago Bridge & Iron advanced 2.62, or 9.9%, to 29.04. The engineering and construction company won a $1.5 billion contract to build a natural-gas liquefaction plant in Peru.

Avery Dennison gained 1.20, or 1.8%, to 69.67. The office-products company swung to a fourth-quarter profit of $101.5 million, or $1.01 a share, from a year-earlier loss of $6.9 million, or 7 cents a share, as sales rose 3.5% to $1.41 billion.

Xerox lost 17 cents, or 1%, to 16.53. In the midst of a restructuring campaign, the imaging company said its earnings dropped 24% and warned results from the current quarter would also be pinched by the costs of realignment efforts.

Brinker International rose 28 cents, or 0.92%, to 30.83. The operator of Chili’s Grill & Bar and other restaurants alluded to a “soft” sales environment as it reported a 3% increase in fiscal second quarter, although earnings did come in one penny ahead of analysts’ projections.

EMC rose 8 cents to 13.55. The data-storage company said its fourth-quarter profit nearly tripled to $388.8 million, or 18 cents a share. Earnings excluding items were 17 cents a share, a penny ahead of analysts’ average forecast.

By Karen Talley, Dow Jones Newswires

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