Microsoft, Coke lead stocks upward

US stocks rallied, lifting the Standard & Poor's 500 Index to its first gain in three days, as Coca-Cola Co, AOL Time Warner Inc and Microsoft Corp gained on Friday.

Third-quarter earnings reports this week weren't as bad as investors had expected, some money managers said. That helped offset concern that the spread of anthrax will hurt consumer confidence, slowing the economy, they said.

"Investors are slowly realizing that the earnings news so far this quarter has turned out to be of higher quality than feared," said Brian Slater, who helps manage US$500 million at Condor Capital Management in Martinsville, New Jersey. "I think people are finally seeing that and letting this anthrax scare go by the wayside and picking up stocks that look cheap."

The S&P 500 rose 4.87, or 0.5 percent, to 1,073.48, erasing a 1.1 percent loss. The NASDAQ Composite Index gained 18.59, or 1.1 percent, to 1,671.31. The Dow Jones Industrial Average rose 40.89, or 0.5 percent, to 9,204.11.

Still, all three indexes posted their first weekly drops since the week of Sept. 17, when trading resumed after the terrorist attacks that destroyed the World Trade Center. The S&P 500 fell 1.7 percent, the Dow 1.5 percent and the NASDAQ 1.9 percent.

"People are trying to figure out how deep and far this anthrax scare goes," said Peter Coolidge, a trader at Brean Murray & Co. "I think that's put everything on hold."

Almost 1.3 billion shares changed hands on the New York Stock Exchange, about average for a day in the past three months. Six stocks rose for every five that fell on the Big Board.

Coca-Cola rose US$2.47 to US$48.59 after UBS Warburg analyst Caroline Levy said that the company's management team "is becoming increasingly cohesive and effective."

In a note to clients, she said it now appears more likely the biggest soft drink maker will meet her goal of 11 percent to 12 percent annual profit growth. Levy raised her rating on the stock to "strong buy" from "hold." Coke has gained 10 percent in the last two days. The company's third-quarter profit yesterday exceeded expectations, and it met analyst forecasts for sales.

AOL Time Warner rose US$1.27 to US$31.17, paring its 11 percent loss of the past two days. The stock had slid after the company reported a wider third-quarter loss.

Microsoft contributed the most to the rise in the S&P 500, gaining US$1.15 to US$57.90. The largest software maker said sales rose 6.2 percent last quarter, boosted by higher demand for corporate-network software. Investment losses pulled down fiscal first-quarter net income.

Gillette Co rose US$1.58 to US$31.30. The largest maker of razors, said sales unexpectedly rose in the third quarter.

Analysts had expected sales to decline 4 percent in the period.

Scientific-Atlanta Inc surged US$3.80, or 22 percent, to US$21 for the biggest percentage gain in the S&P 500. Profit at the maker of cable-television set-top boxes was higher than expected and the company said it will trim costs by firing 750 workers.

SPX Corp rose US$5.28 to US$98.65. The manufacturer of brakes, hydraulic gear and fiber-optic equipment said it expects to meet analysts' estimates this year and next.

Disappointing earnings from companies such as Providian Financial Corp, Texas Instruments Inc, EMC Corp and PMC-Sierra Inc contributed to losses for the week.