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US Stocks Surge; DJIA Hits Record; Yahoo, Sun Power Nasdaq January 24, 2007

Posted by notapundit in Economic News.
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NEW YORK (Dow Jones)–Investors took a shine to news out of Yahoo and Sun Microsystems, pushing the Nasdaq Composite Index to its highest close so far this year.

The Dow Jones Industrial Average also had a mighty session, posting a fresh record close as member AT&T rose on a Cingular event.

There were some downbeat developments, however, as semiconductor giant Advanced Micro Devices issued a withering report and Norfolk Southern stopped a railroad rally in its tracks.

The Dow Jones Industrial Average rose 87.97, or 0.7%, to 12621.77, with 26 of 30 members advancing. The Dow has now marked record closes 26 times since Oct. 3. The Nasdaq Composite rose 34.87, or 1.43%, to 2466.28, its best point and percentage rise since Dec. 4. The Standard & Poor’s 500 Index added 12.14, or 0.85%, to 1440.13, its best gain of the year and now 87 points away from its record of 1527.46, from March 24, 2000.

“Yahoo and Sun overshadowed Advanced Micro, and the market breathed a sigh of relief that President Bush in Tuesday night’s State of the Union speech didn’t say anything dramatic,” said Paul Schatz, head trader at Heritage Capital LLC. “Once the market began to get rolling the momentum just fed on itself. But I think we’re going to peak in the short-term.”

Yahoo (Nasdaq) rose $1.98, or 7.3%, to $28.94, its biggest percentage gain since early April 2004. The Web giant’s fourth-quarter results included a 61% drop in profit blamed in part on higher stock-options expenses, which wasn’t as bad as analysts expected. More enticing was news that the new Panama advertising system – Yahoo’s best hope for cutting the profitability gap with Google – was on track to deliver financial benefits starting next quarter.

Yahoo’s news appeared to galvanize the Internet group, as Google gained 20.02, or 4.2%, to 499.07, again trying to get past 500. Amazon.com advanced 83 cents, or 2.3%, to 37.26, and eBay, which reported after the closing bell, rose 1.38, or 4.8%, to 30. All three stocks trade on the Nasdaq.

Sun Microsystems (Nasdaq) gained 49 cents, or 8.7%, to 6.15, its biggest percentage advance since the beginning of April 2004. The maker of the machines in data centers that handle chores such as running databases and executing financial transactions swung to a profit from a year-earlier loss, continuing to see an improvement in its services and server businesses. Sun also said that private-equity firm Kohlberg Kravis Roberts & Co. will make a $700 million investment in the company in the form of convertible senior notes.

Advanced Micro Devices dropped 1.48, or 8.5%, to 16.03, the Big Board’s third-largest percentage decliner. The semiconductor maker posted a loss in the fourth quarter, hurt by acquisition-related charges and a fierce price war with rival Intel that weighed on gross margins. Dow industrial Intel (Nasdaq) received a vote of confidence, rising 29 cents, or 1.4%, to 20.84.

AT&T advanced 1.27, or 3.6%, to 36.63, its highest closing level in almost five years. Cingular Wireless, which now belongs to AT&T and is the No. 1 wireless carrier by subscriber base, more than tripled its fourth-quarter net income and added a record number of net subscribers.

Norfolk Southern lost 3.12, or 5.8%, to 50.61. Net profit rose 6% to $385 million in the fourth quarter, though a decline in volume during the period indicated the railroad operator is suffering the effects of weakness in certain segments of the U.S. economy. The report came just a day after Burlington Northern Santa Fe rallied the railroad group after saying fourth-quarter earnings rose 21%.

Volume on the New York Stock Exchange was 1.59 billion shares. Up volume beat down by 1.19 billion to 389 million, and stocks that rose in value exceeded those that fell, 2,340 to 1,014.

The final Dow Jones Industrial Average close was 12621.77, up 87.97. On the New York Stock Exchange, there were 2,340 issues advancing, 1,014 declining and 140 unchanged.

NYSE volume totaled 1,645,988,330 shares, compared with 1,730,214,400 Tuesday.

The NYSE Composite Index was 9268.490, up 68.76. The average price per share rose by 21 cents.

Corning rose 2.06, or 11%, to 20.90, its biggest percentage gain since mid-July 2004 and the second-largest percentage gainer on the NYSE. The maker of glass for flat panel television and computer screens swung to a profit in the fourth quarter and issued tepid expectations for the first quarter. But analysts didn’t see the company compromising much revenue by engaging in big price cuts during the slower period.

McDonald’s dropped 69 cents, or 1.5%, to 44.16, the Dow industrial average’s biggest decliner. The hamburger chain’s fourth-quarter net earnings more than doubled, with gains in global same-store sales plus the disposal of a restaurant chain it nurtured helping to drive results. But revenue was a bit light by Wall Street standards, coming in at $5.63 billion, when analysts were looking for $5.67 billion.

Hershey slipped 1.59, or 3%, to 50.78. The confectioner reported disappointing fourth-quarter results, as profit and sales dipped for the period amid competitive pressures and a slowdown in retail performance in the second half of 2006.

Seagate Technology gained 2.17, or 8.3%, to 28.35. The disk-drive maker’s fiscal second-quarter earnings, excluding charges including those related to the acquisition of Maxtor, came in at 39 cents a share, well ahead of analysts’ expectations for 32 cents. Revenue increased 30% to $3 billion when analysts were looking for $2.93 billion.

Hyperion Solutions (Nasdaq) leapt 5.99, or 17%, to 40.41. The provider of business-performance-management software raised its fiscal 2007 outlook and posted second-quarter results above analyst expectations amid growth in license and maintenance and service revenue.

Thornburg Mortgage rose 1.93, or 8%, to 25.99. The home lender, bucking the housing market slowdown, said fourth-quarter net income rose to $80.3 million, or 68 cents a share, from $72.8 million, or 68 cents a share, during the same period in the prior year. Thornburg only deals with affluent borrowers, offering jumbo and super-jumbo adjustable-rate loans.

SAP AG’s American depositary receipts fell 3.52, or 7%, to 46.50. The world’s largest business-software maker by revenue predicted further software and maintenance sales growth in 2007 but also warned that profitability will drop as it is stepping up investments for a push into the mid-market.

Adobe Systems (Nasdaq) rose 2.17, or 5.8%, to 39.69. The software maker named Mark Garrett, an EMC executive, as its chief financial officer after earlier this month saying it had completed an internal review of its stock-options practices.

Continental Airlines lost 1.67, or 3.7%, to 43.15. J.P. Morgan Securities downgraded shares of American Airlines’ parent to underweight from overweight, citing a full stock valuation, high costs and fading chances of a takeover.

AmerisourceBergen gained 3.89, or 8.1%, to 51.96, a fresh 52-week closing high. The pharmaceutical-services company posted a 26% rise in first-quarter profit and lifted its 2007 earnings outlook above Wall Street’s forecast.

Rockwell Automation dropped 2.50, or 4%, to 60.50. The industrial automation services provider’s first-quarter earnings rose to $429.1 million, or $2.50 a share, from $145.7 million, or 80 cents, a year earlier, helped by a tax benefit of $1.54 a share. Sales, at $1.15 billion, fell short of analysts’ expectations for $1.27 billion.

Pactiv lost 3.03, or 8.5%, to 32.55. Fourth-quarter earnings rose 49% as cost cuts helped offset a decline in sales, and the maker of Hefty bags forecast low single-digit percentage sales growth this year and earnings roughly in line with Wall Street forecasts.

AVX advanced 1.42, or 9.8%, to 15.95. The electronic component maker’s net profit for the third quarter rose 47% to $35.8 million, or 21 cents a share, as sales grew 8.3% to $378.1 million.

Albemarle gained 4.77, or 6.6%, to 77.01. The specialty chemicals maker reported fourth-quarter net earnings of $63 million, or $1.29 a share, compared with $32.2 million, or 67 cents a share, on the back of a $5.4 million tax benefit and lower costs of goods sold.

DST Systems gained 2.44, or 3.6%, to 70.50. The computer services company said fourth-quarter net income rose, as costs, expenses and income taxes declined. Net income rose to $81 million, or $1.15 per share, from $50.7 million, or 68 cents a share, during the same period in the prior year.

Air Products & Chemicals gained 2.68, or 3.8%, to 73.95. The producer of atmospheric, process and specialty gases, performance materials, and equipment and services, reported that fiscal first-quarter earnings rose 27% on 21% higher revenue.

TCF Financial lost 96 cents, or 3.6%, to 25.62. The banking company’s fourth-quarter earnings fell 18% from the year-earlier period, which benefited from an $8.8 million reduction in tax costs and a pretax gain of $3.5 million for the sale of buildings and branches.

By Karen Talley, Dow Jones Newswires

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