- The Washington Times - Tuesday, May 9, 2006

Automaker posts first profit since 2004; Dell misses forecast

BLOOMBERG NEWS

The Dow Jones Industrial Average climbed to within 100 points of a record after General Motors showed its first profit since 2004.

GM helped push the Dow higher for a fourth day along with McDonald’s, which reported the biggest sales increase in Europe in at least three years. Dell, the world’s largest maker of personal computers, led declines in technology shares after saying first-quarter profit missed its forecast.

Speculation that the Federal Reserve will have to keep raising interest rates beyond today’s expected 16th-straight move hurt the rest of the market.

Investors were also hesitant to push share prices higher as tensions over Iran’s nuclear program heightened, sending gold prices to $700 an ounce for the first time since 1980 and oil above $70 a barrel.

The Dow average gained 55.23, or 0.5 percent, to 11,639.77, about 83 points from its record close reached in January 2000. The Standard & Poor’s 500 added 0.48 to 1325.14. The Nasdaq Composite Index fell 6.74, or 0.3 percent, to 2338.25.

Almost 10 stocks fell for every nine that rose on the New York Stock Exchange. About 1.52 billion shares changed hands on the Big Board, 6.1 percent less than the three-month average.

GM rallied $2.25, or 9.6 percent, to $25.80 for the biggest gain in the Dow and S&P; 500. The world’s top automaker revised first-quarter results to say net income was 78 cents a share rather than a loss of 57 cents. The Securities and Exchange Commission ruled the costs of funding a $3 billion health care fund and other expenses could be spread over seven years. Deutsche Bank AG raised its GM rating to “hold” from “sell.”

GM’s advance helped send automobile-related stocks higher. Ford Motor, the second-largest U.S. automaker, climbed 20 cents to $7.17.

McDonald’s, the world’s largest restaurant chain, added 44 cents to $35.83. The company said April sales at European restaurants open at least 13 months jumped 9.3 percent from a year earlier. Same-store sales increased 4.1 percent in the U.S. on the debut of stronger coffee and premium chicken sandwiches.

Dell slid $1.23, or 4.7 percent, to $25.20 for the third-biggest loss in the S&P; 500. Earnings for the first quarter ended May 5 were 33 cents a share, less than the company’s forecast of 36 cents to 38 cents. Revenue was $14.2 billion, compared with a prediction of $14.2 billion to $14.6 billion.

An S&P; 500 index of technology shares lost 0.5 percent. Hewlett-Packard dropped 67 cents to $33.12.

Freeport-McMoRan Copper & Gold, owner of the world’s biggest gold mine, rose $2.86 to $69.47. Newmont Mining Corp., the largest gold-mining company, added $2.20 to $57.93.

A gauge of raw-material producers added 0.8 percent, the biggest gain among 10 industry groups in the S&P; 500, on the surge in gold prices.

The Nasdaq may recover from the profit shortfall at Dell tomorrow because of Cisco Systems’ results released after the close that topped estimates.

Cisco climbed $1.12, or 5.2 percent, to $22.80 in extended trading. The world’s biggest maker of computer-networking equipment said it had fiscal third-quarter profit excluding some costs of 29 cents a share. Sales rose the most in seven quarters. Cisco lost 8 cents to $21.68 in regular trading.

Fluor rallied $8.20, or 9 percent, to $101.95 for the second-steepest rise in the S&P; 500. The largest public U.S. engineering and constructio firm said it will earn as much as $3.20 a share this year, more than its previous forecast.

“The best profits that you are seeing for 2006 are occurring just as we speak,” said Robert Rodriguez, who oversees $6.5 billion as chief executive officer of First Pacific Advisors. He expects earnings growth to slow to 5 percent to 7 percent by 2007.

The S&P; 500’s worst performer was Watson Pharmaceuticals, which fell $2.54, or 8.5 percent, to $27.45. The maker of generic drugs said per-share profit this year will be $1.25 to $1.33, below estimates.


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