Share this article

print logo

STOCK PRICES START TO STABILIZE THIS AFTERNOON

Stocks stabilized and started moving higher early this afternoon, possibly turning around a three-day selloff. Bargain hunting, strong first-quarter earnings and a pair of merger announcements may have fueled the turnaround. Global markets were down sharply in response to last week's selling in the United States.

Prices had sagged all morning, continuing a slide that saw three straight triple-digit drops in the Dow. However, by 1 p.m., better than expected earnings from Bank of America Corp. and a drop in oil prices helped reassure investors.

World markets dropped precipitously in aftershocks from Friday. Tokyo markets were further pressured by deteriorating relations with China, while Europe was worried about lackluster corporate earnings as well.

Some investors said shares were attractive after benchmark indexes finished last week at their 2005 lows.

"The economy is still strong," said Gus Sauter, chief investment officer Vanguard Group Inc., which oversees $520 billion, in Valley Forge, Pennsylvania. "This is probably a pretty good buying opportunity."

At 1 p.m., the Dow Jones industrial average rose 4.21, or 0.04 percent, at 10,091.72.

Broader stock indicators also moved higher. The Standard & Poor's 500 index was up 4.68, or 0.41 percent, at 1,147.30, and the Nasdaq composite index rose 10.42, or 0.55 percent, to 1,918.57.

World markets dropped precipitously in aftershocks from Friday's U.S. losses. Tokyo markets were further pressured by deteriorating relations with China, and Japan's Nikkei stock average tumbled 3.8 percent.

European investors were worried about lackluster corporate earnings in addition to Wall Street's selloff. In afternoon trading, Britain's FTSE 100 was down 1.32 percent, Germany's DAX index shed 2.55 percent, and France's CAC-40 was dropped 2.05 percent.

Oil prices reversed nearly two straight weeks of losses, adding to stock investors economic concerns. A barrel of light crude was quoted at $50.75, up 26 cents, on the New York Mercantile Exchange. Bonds were narrowly lower after last week's rally, with the yield on the 10-year Treasury note slipping to 4.23 percent from 4.24 percent late Friday. The dollar fell against most major currencies, while gold prices rose.

Friday's 191 point drop in the Dow helped has created some bargains in the market, according to some analysts.

"Friday's close is the best opportunity to invest in stocks in at least a year," wrote Banc of America Securities LLC investment strategist Thomas McManus in a report. He advised investors to increase their holdings of U.S. shares, raising his recommended equity allocation to 60 percent from 55 percent, the first boost in more than two years.

Adobe Systems Inc. announced it will pay $3.4 billion in stock to acquire fellow software maker Macromedia Inc., combining the latter's Web-design software with Adobe's document design offerings. Adobe dropped $6.35, or 10.5 percent, to $54.31, while Macromedia climbed $3.05, or 9.1 percent, to $36.50.

Electronics Boutique Holdings Corp. surged $14.48, or 35.2 percent, to $55.60 after the video game and software retailer said it will be acquired by rival GameStop Corp. for $1.44 billion in cash and stock, a 34 percent premium over Electronics Boutique's closing price on Friday. GameStop rose $2.78 to $24.39.

Corning rose 57 cents to $11.67. The company said first- quarter profit excluding some items was at least 16 cents a share, more than its previous forecast of as much as 13 cents.

Bank of America saw a sharp rise in first-quarter profits thanks to the acquisition of FleetBoston and lower credit costs. The nation's third-largest bank beat Wall Street profit forecasts by 17 cents per share after one-time costs. Bank of America rose 32 cents to $44.60.

3M fell $5.01 to $75.85 despite posting a 12 percent hike in quarterly profits. The industrial conglomerate, best known for its Scotch brand and Post-It office supplies, credited strong sales and operational efficiencies for the gains, which beat analysts' expectations by 2 cents per share. Revenues, however, were less than Wall Street had hoped for.

Toy manufacturer Hasbro Inc. swung to a loss for the quarter due to higher costs and lower revenue. The company lost 2 cents per share for the quarter, while analysts had expected profits of 4 cents per share. Hasbro fell 36 cents to $18.93.

Advancing issues outnumbered decliners by more than 7 to 6 on the New York Stock Exchange, where volume came to 777.73 million shares, compared with 877.84 million at the same point on Friday.

The Russell 2000 index of smaller companies was down 0.29, or 0.05 percent, at 580.49.

There are no comments - be the first to comment