Stock gains push Dow to 5-year high
NEW YORK » Stocks rose yesterday on upbeat news from big companies: a patent settlement by Bristol-Myers Squibb, strong earnings from Morgan Stanley and a cost-cutting deal between General Motors Corp., Delphi Corp. and the United Auto Workers. The gains were enough to push the Dow Jones industrial average to a new five-year high.
With scant economic data available, the market was driven by news from large-cap stocks. Bristol-Myers jumped 11 percent after the drug maker and its partner, Sanofi-Aventis SA, announced an agreement to settle a patent challenge. Investors were also cheered after Morgan Stanley's quarterly profit rose 17 percent.
Transportation stocks rose after General Motors and parts maker Delphi announced a deal with the UAW that would help the struggling companies cut costs by offering buyouts to 113,000 U.S. hourly workers.
Tech stocks were flat after Microsoft Corp. said it would delay the launch of the consumer version of its new operating system, Vista, until January 2007.
"The news from Microsoft is a significant negative, but clearly the market isn't buckling with that announcement," said Bob Sitko, who manages more than $500 million as a lead portfolio manager with USAA Private Investment Management. Crude oil reserves were also lower than expected, but stocks remained resilient.
"I'm quite pleased the markets have hung in as well as they have," Sitko said.
The Dow rose 81.96, or 0.73 percent, to 11,317.43, its highest level since May 21, 2001, when it reached 11,337.92.
Broader stock indicators were higher. The S&P 500 index rose 7.81, or 0.6 percent, to 1,305.04, and the tech-heavy Nasdaq composite index rose 9.12, or 0.4 percent, to 2,303.35.
Buying was strong: Advancers led decliners by more than 2 to 1 on the New York Stock Exchange.
Bonds rose, with the yield on the 10-year Treasury note falling to 4.70 percent from 4.72 percent late Tuesday. The U.S. dollar was mixed against other major currencies. Gold prices fell.
Crude oil futures fell. A barrel of light crude settled at $61.77, down 57 cents, in trading on the New York Mercantile Exchange.
Kim Caughey, equity research analyst, Fort Pitt Capital Group in Pittsburgh, said she was heartened by FedEx Corp.'s 35 percent jump in third-quarter profits. "The flow of goods is still happening around the world," she said. "That can only point to good things for the global economy."
FedEx rose $1.22 to $114.44.