- The Washington Times - Tuesday, February 17, 2004

NEW YORK (AP) — Investors sent stocks sharply higher yesterday as Cingular’s $41 billion bid for AT&T; Wireless set an upbeat tone on Wall Street, and Disney rejected a hostile takeover proposal from Comcast but said it would consider higher offers.

There was also encouraging economic news from the Federal Reserve, which reported a rebound in production at the nation’s factories, mines and utilities last month. The 0.8 percent rise in industrial production matched forecasts and was welcome after a flat reading in December.

The fairly aggressive bid for AT&T; Wireless Services Inc., which many thought would sell for about $30 billion, sparked a good deal of optimism on the first trading day of a holiday-shortened week. Some hoped the deal would inspire more spending in the telecommunications sector.

“Seeing corporations pay a premium like this for companies could lead some investors to think maybe the market’s still a bit undervalued, so we’re seeing shares drift higher,” said Todd Clark, head of listed-equity trading at Wells Fargo Securities.

The Dow Jones Industrial Average surged 87.03 points, or 0.8 percent, to close at 10,714.88 after a gain of 0.3 percent last week.

The broader market gauges also moved higher. The Nasdaq Composite Index jumped 26.79, or 1.3 percent, to 2,080.35 after falling 0.5 percent last week. The Standard & Poor’s 500 index closed up 11.18, or 1 percent, at 1,156.99 following an advance of 0.3 percent.

AT&T; Wireless soared $1.96, or 16.6 percent, to $13.78 after accepting a $41 billion cash offer from Cingular Wireless, a merger that would create the nation’s largest mobile-phone company. Cingular’s joint owners saw their stocks suffer; majority stakeholder SBC Communications Inc. declined 18 cents to $24.87, and BellSouth Corp. fell 49 cents to $29.06.

Dow component Walt Disney Co. lost 2 cents to $26.90 a day after the entertainment conglomerate’s board refused Comcast Corp.’s unsolicited $54 billion offer, saying it was too low. But the board said it would consider higher offers. Comcast, which stood by its bid, gained 85 cents to $30.75 after several sessions of declines.

GreenPoint Financial Corp. shed $1.58 to $45.25 on news that it would be acquired by North Fork Bancorp Inc. in a $6.3 billion all-stock deal, creating the nation’s 16th-largest bank. North Fork shares fell 38 cents to $43.37.

Further underscoring the ongoing consolidation in the banking sector, Provident Financial Group shot up $3.87, or 11.1 percent, to $38.70 after National City Corp. agreed to acquire it for $2.1 billion in stock.

The combined entity would be Ohio’s largest bank. National City closed down 83 cents at $34.56.

In addition to all the deal making, the number of companies going public is on the rise, with 22 initial public offerings held so far this year. That’s twice as many IPOs as there were in all of the first half of 2003.

“The big thing about all this merger and acquisition activity is it’s a confidence builder,” said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm.

Even so, Mr. Dunay said, some recent economic reports have fallen short of expectations.

Yesterday’s manufacturing data painted an uncertain employment picture, with factories increasing production while keeping work forces lean.

The steady decline of the dollar, which reached an 11-year low against the British pound yesterday, is also worrying some market watchers.

“All these deals show high-end corporate heads really feel there is a lot of future growth potential,” Mr. Dunay said.

“But the economy is important here. The thing we keep questioning is, can the market maintain this momentum?”

Among companies reporting earnings yesterday, heavy-equipment maker Deere & Co. gained $2.99 to $67 after beating analyst expectations on strong sales of agricultural, construction and consumer products, and a continued effort to hold down costs.

The weaker dollar also helped boost foreign sales.

Advancing issues outnumbered decliners about 3-to-1 on the New York Stock Exchange. Consolidated volume was moderate, with 1.85 billion shares traded, compared with 1.69 billion shares Friday.

The Russell 2000 index, which tracks smaller-company stocks, gained 9.34, or 1.6 percent, to end the day at 594.48.

Overseas, Japan’s Nikkei stock average finished 0.2 percent higher yesterday.

In Europe, France’s CAC-40 closed up 0.7 percent, Britain’s FTSE 100 advanced 1.2 percent and Germany’s DAX index gained 0.6 percent.

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