US stocks: Shares rally as oil falls

US stocks rallied on Friday as oil tumbled below US$50 a barrel to a 10-week low, while an upbeat outlook from Microsoft Corp. boosted confidence about earnings.

Microsoft shares rose 3.5 per cent a day after it released a positive revenue forecast for fiscal 2006.

Some economic news also helped support the stock market. A key inflation gauge soothed some worry about higher prices and consumer spending numbers helped, although a weaker-than-expected read on consumer confidence caused some concern.

The Dow Jones industrial average was up 122.14 points, or 1.21 per cent, to close at 10,192.51. The Standard & Poor's 500 Index was up 13.63 points, or 1.19 per cent, to finish at 1,156.85. The Nasdaq Composite Index was up 17.47 points, or 0.92 per cent, to end at 1,921.65.

For the week, the Dow edged up 0.3 per cent, the S&P 500 nudged up 0.4 per cent and the Nasdaq was down 0.6 per cent.

But for the month of April, the Dow fell 3 per cent, the S&P 500 declined 2 per cent and the Nasdaq was off 4 per cent.

Friday's late-day rally brought to a close a turbulent month, during which all three indexes have carved out fresh lows for the year.

"Lower energy prices really helped," said Brian Williamson, vice president of equity trading, at The Boston Co. Asset Management. "That sparked this month-end buying rally. There was some hesitancy this morning -- there's a lot of anxiousness in the market right now -- but energy came in and sparked that month-end buying that may not have materialized otherwise. "

Equities jumped during mid-afternoon trading as NYMEX crude for June delivery slid US$2.05 to settle at US$49.72 a barrel. Lower crude prices relieve some concern about pressure on corporate profits and consumer spending.

That boosted shares of companies particularly sensitive to high oil prices, such as manufacturers. Industrial and aerospace conglomerate United Technologies Corp. rose US$1.88 to US$101.72 while heavy equipment maker Caterpillar Inc. gained US$1.35 to US$88.05.

Despite the decline in oil prices, shares of energy companies gained. Exxon Mobil Corp., which fell 4 per cent on Thursday after its results disappointed, gained 1.8 per cent, or US$1.03 to US$57.03. ChevronTexaco Corp., which reported a 5 per cent rise in quarterly profit, advanced 1.7 per cent, or 85 cents to US$52.

In economic news, the University of Michigan final reading on its consumer sentiment index for April was 87.7, below expectations.

Stripping out volatile food and energy prices, the government's core personal consumption index rose 0.3 per cent in March.

Meanwhile, data from the National Association of Purchasing Management-Chicago showed the April manufacturing index for the US Midwest was 65.6, exceeding economists' expectations.

Microsoft's stock rose 85 cents to US$25.30.

Shares of Morgan Stanley rose 4 per cent, or US$2.18 to US$52.62. Late in the trading session, it was reported on CNBC that the bank had called an "abrupt" board meeting for Saturday to discuss concerns about Chief Executive Philip Purcell's recent actions regarding staff changes.

In other news, independent power producer Calpine Corp. surged 34 cents to US$1.79, a 23.5 per cent rise, as it forecast a wider first-quarter loss than Wall Street was expecting but made no mention of filing for bankruptcy, easing investor fears.

Banc of America Securities raised its rating on International Business Machines Corp. to "buy" from "neutral, " saying it sees limited downside after the stock's prolonged slide this year. IBM rose 47 cents to US$76.38.

Shares of Sun Microsystems Inc. rose 5 per cent, or 18 cents to US$3.62 after BusinessWeek reported that its chief executive is considering taking the company private.

Trading was active, with 1.88 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 2.1 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Advancers outnumbered decliners on the New York Stock Exchange by about 2 to 1 and by about 3 to 2 on Nasdaq.

- REUTERS