• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Stock Prices Climb Ahead of Google IPO

Posted on: Wednesday, 18 August 2004, 06:00 CDT

NEW YORK - Investors shrugged off rising crude futures Wednesday to capture well-priced shares, sending the Nasdaq composite index up 1.6 percent ahead of Google Inc.'s much-anticipated initial public offering of stock.

In afternoon trading, the Dow Jones industrial average gained 67.10, or 0.7 percent, to 10,039.93. The broader gauges were also higher. The Nasdaq climbed 27.81, or 1.6 percent, to 1,823.06. The Standard & Poor's 500 index rose 10.27, or 1 percent, to 1,091.98.

Global fears about terrorism and the premium they've added to oil prices have rattled investors, exacerbating the volatility usually associated with late-summer trading. Analysts remained upbeat about the market's underlying fundamentals, however, and the lack of selling pressure led some to express optimism that the rally, now in its fourth day, might hold.

"People have a tremendous capacity to adapt," said Ken Tower, chief market strategist for Schwab's CyberTrader. "No story stays in the news forever. So it's just possible that the market has now fully discounted higher prices of oil, and is poised to move higher."

Despite the robust performance of tech shares, some analysts questioned the conviction behind the buying. Valuations within the sector, which has been badly bruised, have fallen to attractive levels.

"I wouldn't take today's move as a change in sentiment, or any positive sign at all," said Neil Massa, equity trader at John Hancock Funds. "I think we're still stuck in this trading range. I think investors are truly worried about third and fourth quarter profits. They were expecting a robust recovery ... and it just doesn't look like that's happening."

Investors have grown increasingly worried about inflation in the face of rising energy prices, and a stream of lowered earnings forecasts for the second half of the year has added to that anxiety.

Oil futures surged higher still on worries about the prospects for Russian oil giant Yukos after a Moscow court issued a negative ruling in its tax case. Crude prices declined briefly on reports that a radical Shiite cleric in Iraq had accepted a peace plan, but then reached for a new record high, trading up 65 cents at $47.40.

Attention was again focused on the Google IPO, which was put off because of delays in the approval of its registration at the Securities and Exchange Commission. Formal approval for Google to begin selling its shares was expected later in the day, sources close to the matter said.

The world's most popular search engine forecast its stock to trade between $85 and $95 per share, down from previous expectations that shares would sell for $108 to $135. It also said the total number of shares to be sold will be cut to 19.6 million, down from 25.7 million.

Many analysts were closely watching other search engines to see how they will react when Google emerges as a publicly traded competitor. Yahoo! Inc. was down 21 cents at $28.13. Ask Jeeves Inc. was up 31 cents at $25.64.

Applied Materials Inc. was up 8 cents at $16.15 after reporting better than expected revenues and earnings that beat Wall Street estimates by a penny. Executives described a climate of healthy chip spending, but the company's forecast for the next quarter was somewhat disappointing, giving investors a mixed impression.

BellSouth Corp. fell 10 cents to $27.10 after saying a new medical benefits plan for its retirees will dent earnings by 3 to 4 cents a share in the fourth quarter.

Mylan Laboratories Inc. added 32 cents to $15.68 after saying it would appeal a federal court ruling that found the Food and Drug Administration violated no law when it rejected the company's application for a generic pain patch treatment.

Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange. Volume remained light, with 952.84 million shares traded, compared to 971.54 million at the same point Tuesday.

The Russell 2000 index, which tracks smaller company stocks, was up 9.08, or 1.7 percent, at 539.08.

Overseas, Japan's Nikkei stock average finished 0.5 percent higher Wednesday. In Europe, France's CAC-40 closed up 0.2 percent, Britain's FTSE 100 declined 0.1 percent and Germany's DAX index added 0.6 percent.

----

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

More News in this Category