Shares finish third week of gains in US markets

US stocks rose, finishing a third straight week of gains, as drug and computer-related shares climbed.

Wyeth and Schering-Plough Corp advanced after Lehman Brothers Inc raised its rating on the stocks, saying they were undervalued relative to prospects for profit growth. Microsoft Corp and International Business Machines Corp rose.

"If investors expand their time horizon to one year, two years, given that valuations reflect a pessimistic situation, we think that they will be rewarded," said James Abate, who helps oversee US$17 billion at Global Asset Management Inc. "There may be bumps in the road, but we think that it is a good time to become more aggressive on US equities."

The Standard & Poor's 500 Index rose 15.15, or 1.7 percent, to 897.65, with health-care and computer-related shares contributing almost half the advance. The Dow Jones Industrial Average added 126.65, or 1.5 percent, to 8,443.99. The NASDAQ Composite Index rose 32.42, or 2.5 percent, to 1,331.13. Friday's close was the NASDAQ's highest since Aug. 29.

For the week, the S&P 500 and Dow rose 1.5 percent while the NASDAQ gained 3.4 percent. The indexes haven't had a weekly decline since the five days ended Oct. 4.

The S&P 500 has surged almost 16 percent since touching a 5 1/2-year low on Oct. 9, lifted by rising earnings at companies including Microsoft and Citigroup Inc.

More than 70 percent of the companies in the S&P 500 have reported third-quarter results, according to Thomson First Call.

Among them, profits have increased 5.5 percent. That's below the 7.2 percent analysts estimate for the entire index.

Analysts predict earnings will rise 17.3 percent this quarter and 1.7 percent this year, First Call said.

"Overall, you've seen expectations come down so much there may even be a surprise," said Abate.

The S&P 500 trades for about 18 times forecast earnings, compared with about 30 times in 2000, when the index reached an all-time high.

Two stocks rose for every one that fell on the New York Stock Exchange while more than three advanced for every two that declined on the NASDAQ Stock Market. Some 1.34 billion shares traded on the Big Board, 9.2 percent below the three-month daily average.

Drug shares gained after Lehman Brothers analyst C. Anthony Butler upgraded Wyeth and Schering-Plough.

Wyeth gained US$1.24 to US$34.50. Butler raised his rating to "overweight" from "equal-weight," saying the maker of hormone treatments will have earnings growth in the "low teens" next year. He also said shares are trading at 13 times profit estimates for next year, a five-year low.

Schering-Plough advanced US$1.23 to US$20.35. Butler said shares are trading at 12 times earnings forecasts for 2004 and the company is expected to report 20 percent earnings growth in the period. He lifted the stock to "equal-weight" from "underperform."

Pfizer Inc, the biggest drugmaker, added US$1.33 to US$31.90, and Merck & Co advanced US$2.42 to US$52.91.