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Stocks rally despite concerns about economy

Sat., Nov. 17, 2007, midnight

NEW YORK – Wall Street ended a volatile week with a late-day comeback Friday after investors set aside some concerns about the banking sector and the health of the overall economy.

Stocks began Friday’s session having fallen in six of the prior seven sessions as investors fretted about whether consumers would succumb to higher energy prices, rising mortgage costs and an anemic dollar. Continuing credit turmoil has also stirred concerns about the soundness of corporate balance sheets and profits. A sharp rally Tuesday was largely undone by subsequent pullbacks. On Friday, the market appeared headed to another down day before the major indexes, which had flip-flopped all day, turned higher in the last half-hour.

Financial stocks fell, partly because of a Fortune story that raised the possibility Fannie Mae could be masking the true magnitude of credit-related hits to its profits. Company executives defended a change in the way the largest U.S. buyer and backer of home loans calculates losses on home loans.

Giving investors further reason for worry, FedEx Corp. lowered its earnings expectations for the fiscal second quarter and full year and Starbucks Corp. slashed its earnings forecast for the fourth quarter after it reported traffic at stores open at least 13 months dropped by 1 percent.

But tech stocks fared better. Investors have at times viewed technology companies as likely to fare better during an economic downturn than some groups such as retailers. Cisco Systems Inc., the world’s largest network equipment company, said Friday it plans to repurchase an additional $10 billion in stock and an analyst upgraded Hewlett-Packard Co.

Meanwhile, rising oil prices gave a boost to energy names such as Exxon Mobil Corp. and ConocoPhillips.

The Dow Jones industrial average rose 66.74, or 0.51 percent, to 13,176.79

Broader stock indicators also recovered. The Standard & Poor’s 500 index rose 7.59, or 0.52 percent, to 1,458.74. The Nasdaq composite index rose 18.73, or 0.72 percent, to 2,637.24.

Despite the gains in the major indexes, declining issues outnumbered advancers by about 6 to 5 on the New York Stock Exchange, where volume came to 1.77 billion shares compared with 1.47 billion traded Thursday.

The major indexes managed gains for the week, with the Dow rising 1.03 percent and the S&P 500 and the Nasdaq each adding 0.35 percent.

Government bond prices fell as stocks fluctuated. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.15 percent from 4.14 percent late Thursday. The dollar slipped against other major currencies, while gold prices rose.

Oil prices rose Friday amid expectations that global crude supplies will remain tight despite a U.S. oil inventory report that showed a surprising build in domestic crude stockpiles. Light, sweet crude rose $1.67 to settle at $95.10 on the New York Mercantile Exchange.


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