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From Staff Reports
Indexes gained Friday amid encouraging earnings news from Oracle and a big buyback from Texas Instruments
U.S. stocks rose Friday, capping off a big week in which the U.S. Federal Reserve cut short-term interest rates to stave off a recession. Stronger-than-expected earnings from Oracle (ORCL) and a big share buyback from Texas Instruments (TXN) helped fuel the advance.
On Friday, the Dow Jones Industrial Average rose 53.49 points, or 0.39%, to close at 13,820.19. That's only 180 points shy of its all-time high, reached in July. The Standard & Poor's 500 Index rose 7 points, or 0.46%, to close at 1,525.75. The tech-laden Nasdaq Composite Index climbed 16.93 points, or 0.64%, to finish the week at 2,671.22.
Friday's heavy trading volume came on a "quadruple witching" day for Wall Street – the day every three months on which futures, stock index options, stock options and single stock futures all expire.
Traders will be watching economic reports this week on the direction of both the U.S. and global economies as they decide which way to bet on stocks.
Releases scheduled for next week include includes some closely watched housing numbers, and new and existing home sales for August. Other reports will include income, consumption and durable goods.
U.S. Federal Reserve Chairman Ben S. Bernanke will give the opening remarks at a Fed conference in Chicago.
In the absence of new economic data Friday, comments from Fed officials garnered attention amid growing concerns about the central bank's watch against inflation, Standard & Poor's reported. Speaking at a Bundesbank conference in Frankfurt, Governor Frederick Mishkin said "the most severe business cycle downturns are always associated with financial instability," S&P reported.
Thanks to the uncertain economic outlook Lehman Brothers Economist Drew Matus to predict the Fed will add to last week's surprise rate cut – with three more reductions of a quarter point each: One in December, the second in March and the third in June. That would bring the current 4.75% Fed Funds rate down to 4.0%.
After the October crude oil futures contact on Thursday set a new intraday record of $84.10 a barrel, the November contract fell 16 cents a barrel, closing at $81.62. Some analysts are looking at an ultimate record north of $85 a barrel.
Oracle shares rose 4.4% to a six-year high on Friday after the company said its first-quarter profit soared 25% to 16 cents a share. S&P raised its fiscal 2008 earnings estimate for Oracle to $1.21 per share, and boosted its 12-month target price to $26 a share – reiterating its "buy" rating.
Texas Instruments shares climbed 2.4% after it said it was boosting its dividend by 25% l – to 10 cents a share – and announced a $5 billion stock buyback. That equated to about 10 of its total shares outstanding.
News and Related Story Links:
- Bloomberg News:
U.S. Stocks Rise on Earnings, M&A Speculation; Oracle Climbs.
- Standard & Poor's Outlook.com:
Stocks' Post-Fed Advance Rolls On.