US stocks rose, led by Exxon Mobil Corp and General Electric Co. The Dow Jones Industrial Average finished a second week of gains as investors sought companies with records of consistent profitability, including Coca-Cola Co and Johnson & Johnson.
"People want to be invested, but they want to be invested safely," said James Awad, who manages US$750 million as chairman of Awad Asset Management. "They don't want to be disappointed by earnings problems, accounting problems or balance-sheet problems, so they're gravitating to more defensive stocks."
The Dow advanced 133.47, or 1.4 percent, to 9968.15 and briefly climbed above 10,000. The Standard & Poor's 500 Index gained 8.89, or 0.8 percent, to 1,089.84. The NASDAQ Composite Index rose 8.30, or 0.5 percent, to 1,724.54.
Today's gains pared the NASDAQ and S&P 500's declines for the week. The NASDAQ fell 4.5 percent and has now dropped four straight weeks, the longest streak of losses since March. The S&P 500 lost 1.3 percent. The Dow rose 0.7 percent for the week, extending last week's 1.6 percent advance.
Almost 1.4 billion shares traded on the New York Stock Exchange, 4.2 percent more than the three-month daily average.
More than three stocks rose for every two that fell on the Big Board, while five advanced for every four that declined on the NASDAQ Stock Market.
Investors are avoiding companies with questions about their accounting after the collapse of Enron Corp revealed the energy trader had hidden losses and inflated profits.
Instead, they're buying shares of companies including GE, whose earnings have risen between 10 percent and 42 percent the past eight years.
Johnson & Johnson's profits have risen each of the past 10 years, averaging an almost 14 percent annual gain in earnings per share.
"Big and safe and dull and reliable will work," said Kevin Bannon, chief investment officer at BNY Asset Management, which oversees US$65 billion. He's been adding to holdings in Colgate-Palmolive Co, Johnson & Johnson, United Parcel Service Inc and Home Depot Inc.
"They're not inexpensive," Bannon said, "but companies that can meet expectations will probably be rewarded with above-average multiples."
GE, the largest company by market value, rose US$0.57 to US$38.09; Coca-Cola, the biggest soft-drink maker, climbed US$1.30 to US$47.30; and medical-devices maker Johnson & Johnson advanced US$1.40 to US$59.40.
Oil shares gained with the price of crude. Norway's oil minister said his country will maintain production limits through June as part of an OPEC strategy to bolster prices.
Exxon Mobil climbed US$1.57 to US$40.72, Amerada Hess Corp rose US$2.24 to US$68.87 and ChevronTexaco Corp advanced US$1.59 to US$83.70.
Semiconductor shares gained after Xilinx Inc increased its revenue forecast for the fourth quarter. The biggest maker of programmable chips advanced US$0.92 to US$34.93.
Maxim Integrated Products Inc jumped US$2.05 to US$49.03.
Investors have a "desire to go into areas that are sensitive to" an improving economy, said Dan Rivera, head of equities for American Express Financial Advisors in Minneapolis, which manages about US$80 billion in stocks. Chip companies are expected to be one of the first groups to benefit as the economy grows.
TRW Inc surged US$10.50 to US$50.30 after Northrop Grumman Corp made an unsolicited offer of about US$10.8 billion in stock and assumed debt for the defense contractor. Northrop Grumman, maker of the Global Hawk drone aircraft used by the US military in Afghanistan, dropped US$7.85, or 9.8 percent, to US$109.95.
The biggest decliners of the day have been under fire for accounting-related issues. JP Morgan Chase & Co lost US$0.95 to US$28.19 after the Wall Street Journal reported the Federal Reserve Bank of New York is reviewing trades that appear to relate to an offshore entity set up by Chase Manhattan Bank a decade ago.
Computer Associates International Inc dropped US$2.91 to US$15.99, its lowest in seven years. Chief Executive Sanjay Kumar said the federal government is probing the software maker. Newsday Wednesday reported the US attorney is looking into how the company recorded sales of software and maintenance fees.
Kumar said the company's accounting is proper.
American International Group Inc declined US$71 to US$70.33 and Tyco International Ltd fell US$0.50 to US$27.50, extending its decline this year to 53 percent. Both have suffered because of accounting questions.
"The accounting story just gets more intense every day," said Barry Hyman, investment strategist at Ehrenkrantz King Nussbaum. "JP Morgan's partnerships with Enron raise the question of how deep this story gets."
Other financial companies fell with JP Morgan Chase after UBS Warburg LLC analyst Diane Glossman cut profit estimates for Goldman Sachs Group Inc, Lehman Brothers Holdings Inc and Merrill Lynch & Co, as well as JP Morgan. She said mergers and stock sales won't pick up until corporate executives are confident the economy is rebounding.
Goldman Sachs fell US$0.47 to US$79 and Lehman declined US$0.41 to US$55.44 while Merrill Lynch rose US$0.24 to US$46.95.
BEA Systems Inc, whose software delivers computer programs over the Web, fell US$0.95 to US$14.86. The company said fiscal fourth-quarter profit dropped 44 percent as sales declined and the company paid severance to workers it fired.
Circuit City Stores Inc declined US$7.04, or 30 percent, to US$16.55. The second-largest US electronics retailer cut its fiscal fourth-quarter profit estimates for the electronics business and said it will spin off CarMax Group.
Microsoft Corp shed US$0.06 to US$57.99 after the company disclosed "critical" security flaws affecting at least six products, including its Windows XP operating system and Internet Explorer browser.
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