Updated from 4:05 p.m. ESTBlue-chips jumped Friday, with financials providing leadership, as investors drew encouragement from a settlement of the Wall Street conflict-of-interest scandal and comments from Federal Reserve Chairman Alan Greenspan. The
Still, war fears were not too far from investors' minds. On Thursday, the U.S. said Iraq had committed a "material breach" of a U.N. resolution by failing to fully disclose its efforts to produce weapons of mass destruction. Among sectors, financial, retail, transportation, networking, wireless, footwear, airlines, biotech, consumer products and tobacco were all exhibiting strength. Meanwhile, healthcare stocks were under pressure following a government raid on the offices of Tenet Healthcare ( THC), which has been heavily scrutinized in recent months for its Medicare reimbursement practices. The stock closed down $1.69, or 9.9%, at $15.35 lately. Overall, market breadth was positive. Advancers outpaced decliners 2 to 1 on the New York Stock Exchange, where 1.78 billion shares traded. On the Nasdaq, winners beat losers 9 to 7 on volume of 1.7 billion shares. Athletic shoe maker Nike ( NKE) was in the spotlight after it posted higher second-quarter earnings on Thursday, boosted by more stringent inventories and strong sales overseas. The company posted a net profit of $152 million, or 57 cents a share, beating analysts' expectations by a penny. The company also said it will no longer utilize sneaker-store chain Foot Locker ( Z) as its primary U.S. distributor. The announcement confirms what Foot Locker said in its 10-Q filing earlier this month, that purchases of certain Nike footwear and other products could be reduced by about $300 million to $400 million. According to guidance provided on its third-quarter earnings call on Nov. 21, Foot Locker said its business with Nike would be down in the first four or five months of 2003, but the company will remain a significant supplier in 2003. Foot Locker's shares tumbled 10.2% to $10.48 on the news. Nike traded up 8.6% to $45.10. Halliburton ( HAL), the oil services company formerly run by Vice President Dick Cheney, was under pressure after the Securities and Exchange Commission launched a formal investigation into its accounting and disclosure practices for cost overruns on various jobs. The move comes after Halliburton agreed to settle all pending and future asbestos claims against it by funding a trust with cash, stock and notes worth more than $4 billion. The shares slipped 42 cents, 2.2%, to $19.08.
Separately, Photon Dynamics ( PHTN), a maker of semiconductor testing equipment, got hammered, losing 17.6% to $22.30, after it lowered its first-quarter outlook to reflect weak spending on capital equipment. Another big decliner was construction and transportation company URS Corp. ( URS), which plummeted 27.2% to $14.29 after posting a steep 67% drop in quarterly earnings, as more dwindling state budgets have delayed public works projects and softened demand. Consulting firm Accenture ( ACN) raised its first-quarter earnings forecast but warned that second-quarter profit would be lower than expected as the company struggles to cope with slack demand among its corporate clients. The stock fell 2.2% to $17.15 on the news. Elsewhere, business software developer Cognos ( COGN) projected 10% revenue growth for 2004 sending its shares up 3.2% at $22.80. U.S. Treasury issues were lower, with the 10-year note down 3/32, yielding 3.95%. The 30-year bond was down 1/32, to yield 4.89% Overseas markets were higher across the board, with London's FTSE 100 gaining 1.3% at 3889 and Germany's Xetra DAX up 1.9% at 3016. Japan's Nikkei 225 rose 0.2% to 8406, while the Hang Seng closed up 0.7% to 9629. On Thursday, stocks ended lower as a weak report on the job market and renewed geopolitical concerns overshadowed a raised outlook from Oracle ( ORCL) and solid earnings from brokerages. The Dow closed down 83 points, or 1%, at 8364. The Nasdaq lost 7 points, or 0.5%, to 1354, and the S&P 500 slipped 7 points, or 0.8%, to 884.