US stocks rose for the fourth day in five, barely denting the biggest quarterly decline in the Standard & Poor's 500 Index since the market crash of 1987.
American Express Co and Honeywell International Inc lifted the Dow Jones Industrial Average as investors bet the attacks that destroyed the World Trade Center may depress corporate profits less than some investors expected.
Delta Air Lines Inc, American Airlines parent AMR Corp and other shares that had the biggest drops in the days following Sept. 11 also advanced.
"Some are saying that we are going to have a really awful earnings period, but the market knows that," said Tobias Levkovich, an equity strategist at Salomon Smith Barney. The S&P 500 has lost 4.7 percent since the attacks.
On Friday, it added 22.33, or 2.2 percent, to 1,040.94. Even with its 7.8 percent gain this week, the S&P 500 lost 15.8 percent this quarter for its worst performance since the fourth quarter of 1987. Only one in five stocks rose in the period.
The NASDAQ Composite Index climbed 38.09, or 2.6 percent, to 1,498.80. Its 5.3 percent gain this week left the index 30 percent lower this quarter.
The Dow rose 166.14, or 1.9 percent, to 8,847.56, for a 7.4 percent gain the past five days. It lost 16 percent this quarter.
Some 1.6 billion shares traded on the New York Stock Exchange, 32 percent more than the three-month average. More than three stocks rose for every one that fell on the Big Board.
Money managers may have "raised cash in anticipation of redemptions and it looks like they're trying to put some of that back into the market," said Jim Luke, who manages the US$175 million BB&T Large Company Growth Fund in Raleigh, North Carolina.
Assets of US money-market mutual funds fell by US$15.96 billion to US$2.199 trillion in the week ended Wednesday, according to a report from the Investment Company Institute, the mutual fund industry's trade association. The previous week, assets invested in money funds rose by US$80.15 billion.
Luke said he expects stocks to rally soon in anticipation of an economic rebound fueled by interest-rate cuts. "We have more monetary stimulation than we would have had otherwise."
The Federal Reserve last week cut its benchmark overnight lending rate for the eighth time this year, and many economists and investors expect another reduction Tuesday when the central bank's policymaking Federal Open Market Committee meets.
Honeywell, which makes commercial aircraft control systems, jumped US$1.35 to US$26.40. It's lost 26 percent over the past two weeks.
Microsoft Corp rose US$1.21 to US$51.17, erasing an early 2 percent loss, after the judge in the antitrust case against the company ordered "intensive" settlement talks. The judge set a March hearing to consider ways of restraining the biggest software maker should the negotiations fail.
Cisco Systems Inc advanced US$0.94 to US$12.18. Among other active NASDAQ stocks, Oracle Corp rose US$0.54 to US$12.58 and Nextel Communications Inc. climbed 69 cents to $8.64.
Delta Airlines gained US$1.97 to US$26.33. It was among the 10 biggest decliners in the S&P 500 in the first five days of trading after the World Trade Center was destroyed by hijacked aircraft.
AMR advanced US$1.24 to US$19.14 after Salomon Smith Barney analyst Brian Harris said airlines will rally next year as reductions in capacity and a "steady revenue recovery" boosts profits. Harris raised his rating on AMR to "buy" from "neutral."
Cendant Corp, the franchiser of Days Inn hotels and Avis car rental businesses, rose US$1.36, or 12 percent, to US$12.80. The company said third-quarter earnings, excluding a charge, will be US$0.32 versus the US$0.33 analysts had forecast.
Fourth-quarter profit will be as much as a third below estimates.
"People were expecting worse," said Scott Vergin, who helps manage almost US$6 billion at Lutheran Brotherhood Inc in Minneapolis. Last week's declines in airlines and other travel-related stocks was overdone, he said. Vergin said he bought some airline stocks after they fell.
Cendant shares have lost 28 percent since the attacks.
Other companies joined the company in providing assessments of how the terrorist attack might affect profits.
Bank of New York Co, which matches buyers and sellers for about half of US government bond transactions, said displacement of employees from offices near the World Trade Center and related disruptions will cut about US$125 million off third-quarter profit.
Its shares rose US$1.68 to US$35.
United Parcel Service Inc rose US$2.26 to US$51.98 after saying its third-quarter profit may be as much as 18 percent less than forecast. The biggest package delivery company said its delivery volume fell more than 10 percent in the week after the attack.
Eaton Corp, the second-largest maker of hydraulic equipment, said it expects operating profit for the rest of this year and next year to miss analysts' estimates because of slowing demand for industrial equipment following the terrorist attacks. Eaton fell US$0.11 to US$59.21 Praxair Inc, which supplies coatings and repair services for aircraft engines, rose US$0.73 to US$42, even after the company said it will cut 900 jobs and miss profit forecasts because demand from the aviation industry has declined. The shares fell 22 percent last week.
While insurance companies may be liable for more than US$30 billion in claims from the destruction of the trade center and related disruptions, investors have come to believe the attack will lead to companies boosting the premiums they charge.
The S&P Insurance Composite Index of 20 stocks fell almost 12 percent last week as stock trading resumed following the four-day halt caused by the attack. The index has now erased that decline. After a 2.9 percent rally on Friday, it is up 3.1 percent since Sept. 11.
American International Group Inc climbed US$2 to US$78, its fifth straight increase after falling every day last week. It is 5 percent higher than before the attack.
Berkshire Hathaway Inc gained US$250 to US$70,000 and Chubb Corp added US$1.43 to US$71.41.
Citigroup Inc, parent of Travelers Insurance and the biggest issuer of credit cards, rose US$0.63 to US$40.50 and was among the biggest contributors to the S&P 500's gains on Friday.
Investors sold shares of companies with the biggest credit card businesses last week on concern the terrorist attacks will cause consumer spending to fall and bankruptcies to rise. This week, those stocks pared their losses.
American Express, the No. 1 provider of travel services and No. 4 US issuer of credit cards, rose US$1.60 to US$29.06, though it is still 17 percent lower since the attack.
Bank One Corp, the No. 2 issuer of credit cards, rose US$0.98 to US$31.47, while MBNA Corp advanced US$1.24 to US$30.29. Bank One dropped 16 percent last week, MBNA lost 20 percent, and Citigroup fell 14 percent.
Brokerage stock rallied on Friday. Morgan Stanley Dean Witter & Co climbed US$2.04 to US$46.35, Merrill Lynch & Co rose US$2.79 to US$40.60 and Goldman Sachs Group Inc jumped US$2.45 to US$71.35.
The Russell 2000 Index of smaller stocks rose 11.91, or 3 percent, to 404.87. The Wilshire 5000 Total Market Index, the broadest measure of US shares, rose 212.95, or 2.3 percent, to 9,562.95.
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