- The Washington Times - Wednesday, March 22, 2006

BLOOMBERG NEWS

The Dow Jones Industrial Average rose to its highest level in almost five years yesterday as the outlook for corporate earnings improved. Automakers and parts suppliers led the advance.

The gains in auto stocks followed General Motors’ announcement of a plan to reduce labor costs through employee buyouts. Bristol-Myers Squibb Co. surged after reaching a settlement to delay a generic version of its biggest-selling drug. Morgan Stanley rose as profit beat analysts’ estimates.

Lower oil prices also helped stocks recover after falling earlier in the week amid concern that the Federal Reserve will keep raising interest rates to curb inflation.

“We have felt all along profits would come in better than expected” in 2006, said Keith Wirtz, chief investment officer at Fifth Third Asset Management in Cincinnati, who helps manage $22 billion. “What has been shown backs up our view.”

The Dow average gained 81.96, or 0.7 percent, to 11,317.43, the highest since May 2001. The Standard & Poor’s 500 Index added 7.81, or 0.6 percent, to 1305.04.

Technology stocks trailed the advance as a delay in the next version of Microsoft’s Windows program sparked the stock’s biggest decline since July. The Nasdaq Composite Index, which gets 42 percent of its value from computer-related shares, gained 9.12, or 0.4 percent, to 2303.35.

The market slid this week from near five-year highs as a speech by Fed Chairman Ben S. Bernanke and a report on producer prices rekindled the interest-rate concern. The central bank next meets Tuesday to decide whether to raise the main U.S. rate a 15th straight time.

Stock indexes rebounded yesterday as investors chose to focus on the improving outlook for the auto and drug industries and look past Microsoft’s drop.

GM improved visibility on its financial situation by offering buyouts a third of U.S. employees and reaching an agreement with its biggest supplier, Delphi, to entice thousands more to retire.

Parts maker Lear added 87 cents to $18.18. Seat maker Johnson Controls rose 59 cents to $77.44. Ford gained 10 cents to $8.15. GM added 1 cent to $22.01.

The Amex Pharmaceutical Index had its biggest jump since Jan. 3, climbing 2 percent. Bristol-Myers surged $2.41, or 11 percent, to $25.24 for the largest gain in the S&P; 500. The drug maker and Sanofi-Aventis reached a settlement with Apotex that keeps a generic version of their blood thinner Plavix off the market until 2011. Sanofi-Aventis gained $4.20 to $47.88.

Morgan Stanley gained $1.53 to $61.94. The firm said fiscal first-quarter net income rose 17 percent on revenue from buying and selling stocks and fixed-income securities. Per-share profit was $1.54 a share in the three months ended Feb. 28, exceeding the highest analyst estimate.

Microsoft fell 59 cents, or 2.1 percent, to $27.15 for the worst performance in the Dow average. The Vista version of the Windows operating system that runs 90 percent of the world’s personal computers will be released in January for consumers. It is already two years late and Chief Executive Officer Steve Ballmer said last month that the release was on target for this year. The business version will be released in November.

Companies whose products use Windows slid on concern a January release will wipe out demand during the holiday shopping season. Prudential Equity Group cut its rating on PC makers to “neutral” from “favorable.” Hewlett-Packard, the world’s No. 2 personal-computer maker, fell 18 cents to $33.36.

Apple Computer, whose computers run on a different operating system, added 22 cents to $62.03.

An on-time release of Windows Vista would have been an opportunity for Microsoft “to move up out of this malaise it’s been in for quite awhile,” said Marc Pado, U.S. market strategist for Cantor Fitzgerald LP in San Francisco. Microsoft’s shares have underperformed the S&P; 500 since 2002.

About 11 stocks rose for every four that fell on the New York Stock Exchange.

Almost 1.49 billion shares changed hands on the Big Board, 9.8 percent less than the three-month average.

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