Shares of industrial companies climbed Friday on growing speculation that the Bush administration may soon move to limit liability for asbestos lawsuits, helping stocks edge higher for the week after two successive weeks of losses.
The blue-chip Dow Jones industrial average finished up 44.01 points, or 0.45 percent, to 9,840.08. Still, the Dow cut its earlier rally by almost half. It was led up by industrials such as Minnesota Mining and Manufacturing, up $1.77 at $111.23, and Honeywell International Inc. , up $1.10 at $32.70.
The tech-laced Nasdaq moved back a little into the red, with a loss of 4.88 points, or 0.25 percent, to 1,937.70 while the broad Standard & Poor's 500 index eked out a gain of 1.13 points, or 0.10 percent, to 1,133.28.
For the week, the Dow rose 0.70 percent, the Nasdaq gained 0.38 percent and the S&P 500 added 0.50 percent.
Shares of manufacturing giants Halliburton Co. , Dow Chemical Co. and Minnesota Mining and Manufacturing Co. gained. Topping the list of gainers on the New York Stock Exchange were companies facing asbestos liabilities, including chemicals company W.R. Grace & Co. and building materials makers Owens Corning.
An upbeat forecast by Compaq Computer Corp helped briefly push technology stocks into the black, but the rally lost steam. The broad market finished basically flat as the tech sector was pressured by disappointing outlooks from fiber-optics equipment maker JDS Uniphase Corp. , and mobile phone maker Ericsson .
"Big guys like Ericsson are taken down again and we're not seeing a major turnaround," said Keith Janecek, vice president of institutional sales and trading at Legg Mason Wood Walker. "We've got a mixed bag of earnings here and there's no real feel of direction or a turnaround in the economy. People are starting to be rosier, but we still have some work to do."
Next week, investors will turn their attention to the Federal Reserve's policy-making committee, which will meet to decide whether to cut interest rates again. A majority of Wall Street bond dealers say the Fed is done cutting rates and will keep them at 40-year lows until the second half of the year, a Reuters poll showed Thursday.
White House officials were not talking about details of Bush's speech next week. However, they pointed out that the address is expected to focus broadly on the war on terrorism, homeland security and ways to boost the economy out of recession.
"Whether (President) Bush says anything or not, I don't know. But the fact that someone may be coming to the defense of these companies is certainly enough to get some buying going on," said Brian Pears, head of equity trading at Victory Capital Management. "It might finally be a time to look at these companies, based on their valuations and not based on fears about asbestos."
W.R. Grace surged 26 percent or 50 cents to end at $2.41, topping the list of percentage gainers on the Big Board, and Owens Corning, up 47 cents at $2.42, ranked No. 2 on the list. Dow Chemical rose 90 cents to $28.90 and Halliburton jumped 97 cents to $14.34.
Compaq fell 10 cents to $11.95, after earlier rising by a similar amount. The computer maker raised its outlook for fiscal 2002, saying earnings would top Wall Street's estimates by as much as 28 percent.
The S&P Computer Hardware index held some gains, though, up 0.66 percent, reflecting gains by other PC makers, such as Dell Computer, up $1.1399 at $28.44.
Ericsson lost 31 cents to $4.38, or 6.6 percent, after the No. 3 mobile phone maker said it saw "grim" market conditions for the "first couple of quarters" of the year. Rival Nokia Corp. fell 18 cents to $23.12.
JDS Uniphase lost 9.25 percent, or 73 cents, to $7.16 after it said it was no longer sure March would mark a trough in sales. The company also reported second-quarter revenues that matched its forecasts.
Sanmina-SCI , a contract manufacturer, lost 10 percent, or $1.75, to $15.44. It posted a 96 percent drop in pro forma profit and forecast sales and operating profits for the current quarter below Wall Street estimates, as the lagging economy hurts business.
Computer security and Web address provider VeriSign Inc. shed $1.5799 to $34.6701 after it reported a narrower net loss as enterprise business revenues grew. But it lowered its outlook for 2002 due to the prolonged economic slowdown.
Amazon.com Inc.'s stock and bonds rose after Moody's Investors Service raised the company's ratings, three days after the online superstore posted its first net profit following strong holiday sales. It rose 43 cents to $14.44.
"The upgraded ratings reflect improved operating measures and sharply lower cash drain from operations," wrote Moody's vice president Marie Menendez. "The company has sufficient cash on hand to finance its operations for the medium term."
Advancing issues outnumbered decliners 8 to 7 on the New York Stock Exchange. Volume was moderate.
The Russell 2000 index, which tracks the performance of smaller company stocks, slipped 0.38, or 0.1 percent, to 479.35.
In overseas trading, Japan's Nikkei stock average finished Friday with a gain of 0.7 percent. In Europe, Britain's FT-SE 100 fell 0.8 percent, France's CAC-40 lost 0.5 percent, and Germany's DAX index declined 0.3 percent.
Reuters and the Associated Press contributed to this report.