Equities in the US rose as Citigroup Inc led an afternoon rally triggered by speculation that regulators and securities firms are nearing a settlement on conflict-of-interest charges.
The advance helped the Dow Jones Industrial Average climb for a sixth week, its longest streak of weekly gains in more than three years. A report showing consumer confidence topped forecasts followed a larger-than-expected rise in retail sales.
Friday's rebound from early losses suggested "the big money is ready to get back into the market," said Charles Ryan, who helps oversee US$10 billion at BB&T Asset Management in Raleigh, North Carolina. "Now is the time to get in -- before the snowball builds up."
The Dow added 36.96, or 0.4 percent, to 8,579.09. The Standard & Poor's 500 Index rose 5.56, or 0.6 percent, to 909.83. Financial shares accounted for a third of its gain. Both indexes lost almost 1 percent before rebounding.
The NASDAQ Composite Index slipped 0.38 to 1,411.14. Intel Corp dropped after being cut to "sell" at Merrill Lynch & Co, and Dell Computer Corp declined after saying demand probably won't rise this quarter.
For the week, the Dow gained 0.5 percent. Its last six-week winning streak ended May 7, 1999. The S&P 500 rose 1.7 percent and the NASDAQ 3.8 percent. Both advanced for the fifth week in six.
While the S&P 500 has rallied 17 percent since its five-year low on Oct. 9, it's down 21 percent this year and is set to record its third year of losses.
"We think we've seen the bottom in the market," said Rick Jandrain, chief investment officer of Columbus, Ohio-based Banc One Investment Advisors, which manages US$135 billion.
Stocks got a lift from a Cable News Network report that the US captured an unidentified senior leader of the al-Qaeda network.
The University of Michigan's consumer sentiment index showed an increase to 85 in November from 80.6 in October. Economists surveyed by Bloomberg News forecast 82.
Almost three stocks rose for every two that fell on the New York Stock Exchange, while advancing and declining shares were about even on the NASDAQ Stock Market. Some 1.39 billion shares traded on the Big Board, 4.5 percent below the three-month daily average.
Citigroup, the world's biggest financial services company, rose US$0.76 to US$36.90. Its Salomon Smith Barney unit and Credit Suisse First Boston Inc. may face fines of US$200 million each under a plan being discussed by regulators to settle charges their research was tainted by business interests, people familiar with the situation said.
Merrill Lynch spokesman Tim Cobb, CSFB spokeswoman Victoria Harmon, Spitzer spokesman Darren Dopp and SEC spokeswoman Christi Harlan declined to comment. Citigroup spokeswoman Leah Johnson didn't return a phone call for comment.
"In the case of Citigroup, if it can pay what's perceived to be an acceptable fine and put this behind them, then most investors would view that as a positive," said Tim Connors, director of research at Delaware Investments Inc, which manages US$82 billion and owns more than 7 million Citigroup shares.
Among other brokerages, Morgan Stanley rose US$1.17 to US$42.45.
Merrill Lynch & Co Inc added US$0.32 to US$39.42.
American International Group Inc added US$2.14 to US$67.89. Its Zurich-based AIG Privat Bank AG unit will take over Swiss financier Martin Ebner's small-accounts business in January. AIG will have 115,000 clients after the purchase.
Gap Inc rose US$0.92 to US$14.82 after reporting its first quarterly profit increase in more than two years. The largest US clothing retailer had third-quarter net income of US$0.15 a share. Analysts surveyed by Thomson First Call expected US$0.14 a share.
Kohl's Corp gained US$3.19 to US$66.90. The low-price retailer said third-quarter profit rose 33 percent and the company expects to record its seventh straight year of earnings growth of at least 30 percent.
Intel, the world's largest chipmaker, slumped US$0.41 to US$18.80. Merrill analyst Joseph Osha said stock in the world's biggest computer-chip maker is too expensive and lowered his rating to "sell." Its shares, which rallied as much as 43 percent since Oct. 9, sell for 39.5 times expected profit the next 12 months. The average for companies in the S&P 500 is 18 times.
Merrill also cut its ratings on Analog Devices Inc and PMC-Sierra Inc to "sell" from "neutral." Analog Devices, a maker of high-speed communications chips, slipped US$0.52 to US$28.94.
Dell slid US$1.12 to US$29.82. The world's largest personal-computer maker forecast fourth-quarter profit of US$0.23 a share on sales of US$9.7 billion, in line with the average forecast of analysts surveyed by First Call.
Veritas Software Corp tumbled US$1.50 to US$16.75. The maker of computer data-storage software said the SEC and Justice Department subpoenaed it for a probe into how an AOL Time Warner Inc. unit recorded advertising sales.
Veritas is furnishing information involving a US$50 million software license and services sale to AOL Time Warner in September 2000, the company said in a filing.
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