US stocks: Blue chips surge as Dow and S&P hit '05 highs

NEW YORK - US blue-chip stocks hit new highs for 2005 on Friday after a three-day rally as oil company shares including Exxon Mobil Corp. touched historic peaks amid lofty crude prices and a brokerage upgrade.

Also boosting market sentiment was a government report that showed gross domestic product in the fourth quarter was better than Wall Street had expected.

With crude futures prices approaching US$52 a barrel, Prudential Equity Group raised its rating on Exxon Mobil and increased price targets on major oil companies.

Exxon jumped 3.5 per cent to US$63.26 and ConocoPhillips Coclimbed 1.9 per cent to US$112.32. Earlier, both stocks hit all-time highs. ChevronTexaco Corp. advanced 1.3 per cent to US$61.94.

Semiconductor makers Qualcomm Inc. and Intel Corp. helped lift the tech-heavy Nasdaq. Qualcom rose 4.2 per cent to US$37 and Intel climbed 1.7 per cent to US$24.09.

The Dow Jones industrial average rose 92.81 points, or 0.86 per cent, to 10,841.60. The Standard & Poor's 500 Index was up 11.17 points, or 0.93 per cent, at 1,211.37. The technology-laced Nasdaq Composite Index finished up 13.70 points, or 0.67 per cent, at 2,065.40.

Friday's gains topped a strong three-day recovery for US stocks following a broad sell-off on Tuesday. For the week, the Dow rose 0.52 per cent, the S&P 500 edged up 0.81 per cent, and Nasdaq climbed 0.33 per cent.

Gross domestic product, which measures total goods and services production within US borders, grew at a revised 3.8 per cent annual rate in the fourth quarter. Wall Street economists had forecast a 3.7 per cent rise.

"GDP being revised up for the fourth quarter shows there is still great vitality out there," said Joseph Battipaglia, chief investment officer for Ryan, Beck & Co.

"The momentum of the last couple of days suggests to investors that despite high energy prices, it is still OK to be buying stocks - and there is leadership in energy and materials," Battipaglia said.

US crude oil for April delivery settled up 10 cents at US$51.49 a barrel, off Thursday's peak of US$52.05 - the highest since Nov. 1. Earlier on Friday, April crude made another run toward US$52, rising as high as US$51.90 on the New York Mercantile Exchange.

Rising oil prices usually hurt most stocks because of worries they will pinch corporate profits and curb consumer spending. But oil companies' profits and stock prices climb when crude prices surge.

Soaring energy, metals and grain prices this week carried the Reuters CRB Index above the 300 mark for the first time since the last commodities boom was ending in early 1981.

The CRB index of 17 evenly weighted commodity futures is considered a benchmark gauge of inflation and demand for raw materials. It is watched closely by economists and investors.

Friday's trading in stocks was active, with 1.52 billion shares changing hands on the New York Stock Exchange, above last year's daily average of 1.46 billion. About 1.77 billion shares were traded on Nasdaq, just below last year's 1.81 billion daily average.

Advancers outnumbered decliners by more than 3-to-1 on the NYSE and by about 2-to-1 on Nasdaq.

In corporate news, MCI Inc. Chief Executive Michael Capellas said the company would "do our utmost" to close a US$6.75 billion deal with Verizon Communications Inc. in a timely fashion.

MCI also reported a fourth-quarter net loss and said there was no exact estimate for how much time its board would need to review a revised US$8 billion offer from Qwest Communications International Inc. MCI fell 1 per cent to US$22.60, Qwest slumped 8 per cent to US$3.86 and Verizon climbed 2 per cent to US$36.20.

Clear Channel Communications Inc. fell 3.4 per cent to US$32.75 after the largest US radio station chain posted a quarterly net loss after a US$4.9 billion charge to write down the value of its radio licenses.

- REUTERS