NEW YORK – Two major acquisitions and upbeat earnings from Hewlett-Packard Co. (HPQ) lifted stocks modestly Friday as Wall Street fought to prolong its latest rally.
A drop in oil prices also eased worries about consumer spending and helped send the major indexes to four-year highs early in the session. But many analysts are split over whether the stock market will have its usual year-end rally, and trading has become erratic as mixed economic and earnings data has left investors wondering about the economy's health.
"You've had a pretty good run off the October bottoms," said Russ Koesterich, senior portfolio manager at Barclays Global Investments. "But there really are no major catalysts to help support the market coming into these levels.
"You don't want to read too much into a Friday of late November," he added.
Crude futures fell to five-month lows although the approaching winter weather still has many concerned about oil and gas supplies. A barrel of light crude dropped 20 cents to $56.14 on the New York Mercantile Exchange.
The Dow Jones industrial average climbed 26.74, or 0.25 percent, to 10,746.96, after retreating from a 76-point gain earlier in the day.
Broader stock indicators lingered near their highest levels since mid-2001. The Standard & Poor's 500 index was up 3.23, or 0.26 percent, at 1,246.03, and the Nasdaq composite rose 4.56, or 0.21 percent, to 2,225.02.
Bonds slipped, with the yield on the 10-year Treasury note rising to 4.5 percent from 4.47 percent late Thursday. The U.S. dollar was mostly lower against other major currencies in European trading, while gold prices declined.
Although recent reports show the nation withstood the blows dealt by hurricanes Katrina, Rita and Wilma, investors continue to be uncertain about future economic growth and corporate profits. This week brought conflicting data on inflation and retail spending, raising concerns about the critical holiday shopping season.
But improving economic and earnings figures have built a foundation on which the market could close out the year with double-digit gains, said Susan Malley, chief investment officer for Malley Associates Capital Management.
"Stocks are up 5 percent or 6 percent since their October lows, and the market has broadened considerably — instead of just energy, most of the sectors are performing," Malley said. Coupled with recent upbeat news, "that makes me feel optimistic about the rest of the year."
Acquisitions led the day's headlines. Networking firm Cisco Systems Inc. (CSCO) is buying Scientific-Atlanta Inc. (SFA), a maker of cable television set-top boxes, for $6.9 billion, or $43 per share. The deal, a 3.7 percent premium to Scientific-Atlanta's Thursday closing price, is expected to boost 2007 results. Cisco fell 38 cents to $16.99, and Scientific-Atlanta advanced 71 cents to $42.16.
General Electric Co. (GE) has agreed to sell most of its insurance business to Swiss Reinsurance Co., the world's second-largest reinsurer, for $6.8 billion in cash and stock. Swiss Re will also assume $1.7 billion of GE's debt. GE added 91 cents to $35.57.
In earnings news, Hewlett-Packard said late Thursday that a $1.1 billion restructuring charge caused its quarterly profit to slide 62 percent. But its adjusted earnings handily beat Wall Street estimates as revenue grew across its computer, printer and software divisions. Hewlett-Packard jumped 37 cents to $29.37.
Walt Disney Co. (DIS) sank 81 cents to $25.18 after posting a 26 percent drop in quarterly profit, which it blamed on weak sales of DVDs and consumer products that offset higher earnings from its television and theme park units.
Clothing retailer Gap Inc. (GPS) on Thursday reported its profit plunged 20 percent as sales fell modestly, prompting the company to cut its full-year outlook. Gap slid $1.48 to $17.03.
Women's apparel maker AnnTaylor Stores Corp. (ANN) said its quarterly profit more than doubled as sales expanded by 12 percent. While AnnTaylor's income topped analysts' expectations, its sales lagged estimates. AnnTaylor nonetheless jumped $1.72 to $30.
Advancing issues led decliners by 17 to 15 on the New York Stock Exchange, where volume of 1.38 billion shares beat the 1.26 billion shares traded at the same point Thursday.
The Russell 2000 index of smaller companies rose 4.08, or 0.61 percent, to 671.22.
Overseas, Japan's Nikkei stock average surged 1.47 percent. Britain's FTSE 100 gained 0.71 percent, Germany's DAX index added 0.47 percent, and France's CAC-40 was higher by 0.73 percent.