Verizon and Target shares advance

US stocks rose, lifting the Standard & Poor's 500 Index to a second straight weekly gain, as some investors said the market had become inexpensive even if the US invades Iraq.

The 10 biggest companies by market value rose, including Microsoft Corp, Johnson & Johnson and General Electric Co.

Verizon Communications Inc advanced after a Credit Suisse First Boston Inc analyst recommended the largest US local phone company's shares.

"Stocks are at least reasonably valued, if not cheap," said Rick Jandrain, chief investment officer at Banc One Investment Advisors, which manages US$155 billion in Columbus, Ohio. "The economy isn't all that bad and companies basically made their earnings numbers in the fourth quarter."

For the week, the S&P 500 rose 1.6 percent, paring its 2003 loss to 3.6 percent. The Dow average rallied 1.4 percent for the week, while the NASDAQ Composite Index jumped 3 percent, its biggest rise in six weeks. The NASDAQ is up 1 percent for the year.

Almost 1.4 billion shares changed hands on the New York Stock Exchange, up 2.2 percent from the average of the past three months. Five stocks rose for every two that fell on the Big Board.

Among the biggest companies, Microsoft rose US$0.46 to US$24.61, Johnson & Johnson advanced US$1.56 to US$53.48 and General Electric climbed 45 cents to US$23.80. The three contributed the most to the S&P's gain.

Still, stocks may have rallied more were it not for the dispute with Iraq, some investors say. The companies in the S&P 500 sell for an average of 16.5 times this year's expected earnings, down from 22 at the start of last year.

"The odds are definitely in favor of a US attack on Iraq whether we get a UN resolution or not and that's keeping a lid on stocks," said Jandrain, who bought shares of Wal-Mart Stores Inc and PepsiCo Inc last quarter for his One Group Large Cap Growth Fund. "Everybody's just waiting."

Verizon rose US$0.88 to US$35.64. CSFB analyst Lara Warner raised her rating to "outperform" from "neutral," saying recent declines make the stock attractive. The former Bell operating companies fell yesterday after US regulators voted to retain rules forcing the carriers to sell rivals discounted access to their networks. Verizon fell 8.3 percent the past two days.

BellSouth Corp, the No. 3 US local phone company, jumped US$0.90 to US$21.50 after Sanford C. Bernstein & Co analyst Jeffrey Halpern raised his rating to "outperform" from "market perform."

The stock had fallen 11 percent the prior two days.

Target Corp rose US$1.71 to US$28.48 after a US Bancorp Piper Jaffray analyst upgraded the second-largest US discount retailer to "strong buy" from "outperform." The shares are cheap at 13.1 times expected earnings this year, compared with 16.8 times historically, analyst Jeffrey Klinefelter wrote in a report. Competition from Kmart Corp's liquidation sales is gone and Target's credit portfolio is stabilizing, he said.

Agilent Technologies Inc, which makes gear to test computer chips and telecommunications equipment, rose US$0.85 to US$13.45.

The company will cut 4,000 jobs, or 11 percent of its staff, after the company had its biggest quarterly loss because of falling demand for testing equipment.

BEA Systems Inc, whose Web software is used by Amazon.com Inc and Charles Schwab Corp, fell 58 cents to US$10.63. The software maker's chief executive officer said the threat of conflict in Iraq makes it hard to predict earnings. "The geopolitical situation right now is really unstable," CEO Alfred Chuang said in an interview. "We don't know what impact that will have."