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By Jennifer Yousfi
Stocks rallied in early morning trading today (Friday), buoyed by renewed confidence in the financial and technology sectors.
At midday, the three major indices had pared some gains, but were still ahead. The blue-chip Dow Jones Industrial Average Index had posted a slight gain of 40.86 points (0.33%), to trade at 12,343.32. The tech-laden Nasdaq Composite Index increased 9.37 points (0.41%), to reach 2,290.20. And the broader Standard & Poor's 500 Index inched up 4.21 points (0.32%), to hit 1,329.87.
Sectors were mostly up with the energy sector (1.05%), and the technology sector (0.89%), posting the largest gains. The services sector had the biggest decline (-0.19%).
Citigroup Inc. (C) analyst Prashant Bhatia upgraded Lehman Brothers Holdings Inc. (LEH) to a "buy" despite persistent rumors that have taken a toll on the shares of the fourth-largest U.S. securities firm amid worries Lehman would find itself in a position similar to the former fifth-largest U.S. securities firm, The Bear Stearns Cos. Inc. (BSC).
"Reality will trump fear," Bhatia wrote. "Lehman has ample liquidity to run its business."
Lehman Bros. stock received a boost in early morning trading, climbing as high as $40 per share, before settling back to $38.95, up 0.76% (or $0.29) at 11:35 AM.
Meanwhile, Citigroup stock was down 2.71% with a decrease of $0.59 to trade at $21.20 at midday as new Chief Executive Officer Vikram Pandit continues to make management changes at the highest levels.
Pandit has replaced the former co-heads of the global equity finance and prime brokerage units, Ali Hackett, 51, and Tom Tesauro, 46, with the head of the European unit of the division, Nick Roe, 42.
Hackett and Tesauro will leave the bank. Their departure marks the latest in a string of management replacements that Pandit has made since being installed as CEO after the ouster of Charles O. "Chuck" Prince late last year. Other management changes include the promotion of Jon Havens, 51, to head the securities unit as well as naming new heads of risk management and administration.
In late February, Citi announced in a statement that Brian Leach would assume the role of chief risk officer. Leach replaced 33-year bank veteran Jorge Bermudez, who held the post just three short months.
"Taking intelligent risk is the core of our business. As our industry grapples with one of the most difficult periods in market history, we at Citi are moving aggressively to transform our risk management culture into a significant competitive advantage," CEO Vikram Pandit said. In his new role, Leach reports directly to Pandit.
Also today, The Wall Street Journal reported, citing unnamed sources, that Citi has hired Terri Dial from Lloyds TSB Group PLC (LYG) to manage its U.S. consumer unit.
"For Pandit it's the case of a new broom sweeps clean," Rupert Della-Porta, the chief operating officer at Atlantic Equities in London, told Bloomberg News. "You should expect a rotation of people, and prime brokerage is an area that people are focusing on, including Citigroup."
At midday, the dollar had gained ground against the euro (up 0.158%) and the pound sterling (up 0.552%), but held steady against the yen (0.000%).
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