wall street - the rally continues

U.S. Stocks Climb for a Fifth Day as Fed Minutes Trigger Rally

Nov. 22 (Bloomberg) -- Evidence that the Federal Reserve may soon stop raising interest rates triggered an afternoon rally in U.S. stocks. Prices rose for a fifth day, their longest streak since September.

Minutes from the Fed's latest policy meeting showed that some central bankers expressed concern about boosting rates too far. The market climbed after the minutes were released, fueling a fourth-quarter run that has lifted the Standard & Poor's 500 Index to its highest since 2001.

Companies that stand to benefit most as the central bank ends its series of increases, including Citigroup Inc., led today's advance.

The Fed is ``probably getting close to the end,'' said Al Kugel, who helps oversee $17 billion as chief investment strategist at Atlantic Trust/Stein Roe in Chicago. ``That's seeping into the market. Sentiment is turning more positive.''

The S&P 500, which was little changed before the minutes, climbed 6.38, or 0.5 percent, to 1261.23. The Dow Jones Industrial Average added 51.15, or 0.5 percent, to 10,871.43. The Nasdaq Composite Index rose 11.89, or 0.5 percent, to 2253.56 as chipmakers gained.

The S&P 500 has advanced 2.6 percent since Sept. 30, driven by a drop in energy prices and economic reports that signaled growth with tame inflation. Anticipation of a fourth-quarter rally has helped fuel that gain. The S&P 500 has risen during the fourth quarter for nine of the past 10 years.

Fed Minutes

Federal Reserve policy makers discussed the need ``before long'' to change their outlook for the benchmark U.S. interest rate, the minutes of their Nov. 1 meeting showed.

Some members of the Federal Open Market Committee ``cautioned that risks of going too far with the tightening process'' may eventually emerge. Investors also found reassurance in the Fed's outlook on the economy as having a ``good deal of forward momentum in the third quarter.''

``Investors are looking for a slight modification in the wording that the Fed is close to ending hikes,'' said Tim Woolston, who helps manage $3.5 billion at Boston Advisors Inc. ``We got that, so the market said, ``let's go.'''

The Fed voted 10-0 on Nov. 1 to raise its main rate by a quarter percentage point to 4 percent, a four-year high. It has boosted rates at each of its meetings since June 2004.

Paring Bets

Futures traders pared bets that the Fed will increase its benchmark interest rate to 4.75 percent by April after the minutes were released. The yield on federal fund futures for April delivery fell 7 basis points at the Chicago Board of Trade to 4.58 percent. The drop signals traders see a 32 percent chance of an increase to 4.75 percent rate by April, down from 58 percent yesterday.

The Fed's comments overshadowed a gain in energy prices. Crude for January delivery jumped 2 percent to $58.84 a barrel in New York on expectations colder weather in the U.S. will increase fuel use. Oil is still 17 percent below a record $70.85 reached on Aug. 30.

A gauge of financial stocks erased an earlier decline and added 0.8 percent. Steady interest rates sustain the value of bonds owned by banks, brokers and insurers, and support demand for mortgages and loans.

Citigroup, the largest financial-services company, added 41 cents to $48.92. Morgan Stanley advanced 43 cents to $56.45.

An S&P measure of homebuilders jumped 2.7 percent, with 14 of 16 members advancing, after earlier falling as much as 1.4 percent. Centex Corp., the No. 3 U.S. homebuilder by stock market value, rallied $1.94 to $76.04. Pulte Homes Inc. gained $1.01 to $42.82.

Retail Stocks

Retail stocks, lower ahead of the minutes, gained. An S&P 500 index of such companies increased 0.6 percent after earlier sliding as much as 0.6 percent. Wal-Mart Stores Inc., the world's biggest retailer, added 58 cents to $50.20. Lowe's Cos., the No. 2 home-improvement store, gained 66 cents to $67.04.

Investors are looking ahead to Nov. 25, the day after the Thanksgiving holiday, which is traditionally the beginning of the holiday shopping season and an important indicator of how retailers will fare.

The National Retail Federation, a Washington-based trade group, today raised its November-December retail sales growth forecast to 6 percent, citing strong October gains and a decline in gasoline prices. The trade group's earlier estimate of 5 percent would have meant the slowest growth since 2002.

Almost nine stocks rose for every five that fell on the New York Stock Exchange. Some 1.67 billion shares changed hands on the Big Board, 1.8 percent more than the three-month average.

Chipmakers

Chipmakers jumped 2.2 percent as Texas Instruments Inc. rose on a report it may sell one of its business units.

Texas Instruments climbed 75 to $32.55. The world's largest maker of chips that run mobile phones has reached an agreement to sell its sensors and controls business, Robert W. Baird analyst Tristan Gerra said. Gerra said he got the information from ``industry sources'' and doesn't know who is buying the unit or the price. Texas Instruments spokeswoman Gail Chandler said the company doesn't comment on rumors.

Intel Corp. gained a day after the world's biggest computer- chip maker announced a joint venture with Micron Technology Inc. to make flash-memory products that power iPod music players and digital cameras. Annual growth in demand for such components could remain at 200 percent or more after 2005 and the venture won't lead to oversupply, said Merrill Lynch & Co. analysts Simon Dong-je Woo and Joseph Osha in a note.

Intel advanced 91 cents to $26.16. Micron, the largest U.S. maker of computer memory chips, added 47 cents to $14.67. The Merrill analysts upgraded Micron to ``buy'' from ``neutral,'' saying the deal with Intel ``suggests great business opportunities for Micron.''

Deere Rallies

Deere & Co. rose $4.40, or 7 percent, to $67.40 for the top gain in the S&P 500. The world's largest maker of farm equipment reported fiscal fourth-quarter earnings of 96 cents a share on sales of $5.18 billion. Analysts, on average, expected profit of 79 cents on revenue of $4.53 billion, according to a Thomson Financial survey. Thomson didn't respond to a message asking for details on the parameters of the survey.

PepsiCo Inc. increased 97 cents to $59.37. The maker of Frito-Lay and Doritos chips said it will buy Sara Lee Corp.'s European nuts business for 130 million euros ($152 million) to increase profit from snacks.

Procter & Gamble Co. declined 50 cents to $57.14. The largest U.S. consumer-goods maker said late yesterday it will cut prices on Pampers and Luvs diapers by an average of 3 percent starting December, four months after raising them to recover commodity costs. P&G's U.S. market share faced ``weakness'' after store brands failed to life their prices, Jason Gere, an analyst at A. G. Edwards & Sons Inc. in New York, wrote in a report.

Spiders, QQQQs

S&P 500 shares, called Spiders, advanced 54 cents to $126.30. Nasdaq-100 tracking shares, known by their QQQQ symbol, added 15 cents to $41.70.

S&P 500 futures expiring in December climbed 5.10 to 1262.10 on the Chicago Mercantile Exchange. Nasdaq-100 Index futures were up 5 at 1696.50.

The Russell 2000 Index, a benchmark for companies with a median market value of $563 million, rose 0.5 percent to 682.55. The Dow Jones Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, gained 66.20, or 0.5 percent, to 12,609.54. Based on the changes in the Wilshire, the value of stocks increased by $82.8 billion.