Stocks moved solidly higher Wednesday, helped by renewed investor interest in technology stocks and a positive earnings report from media giant Time Warner.
Investors, cheered by falling energy prices, were “giddy to purchase equities,” noted market-analysis firm Briefing.com.
The Dow Jones industrial average climbed 65.96 points, or 0.6 percent, to close at 10,472.73. The broader Standard & Poor’s 500 index increased 12 points, or 1 percent, to 1214.76.
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And the technology-heavy Nasdaq composite index, bolstered by the recovery in high-tech stocks, rose a hefty 1.4 percent, advancing 30.26, to 2144.31.
The rally was broad-based, with advancers outnumbering decliners by about a 3-1 ratio on the New York Stock Exchange. Even the downtrodden newspaper-publishing sector, which has for some time been the Death Valley of Wall Street, enjoyed a rare upturn.
Time Warner shares advanced 1.9 percent, to $17.90. A better-than-expected third-quarter earnings performance helped the widely held stock. So did an announcement that the company will expand its share-repurchase program to $12.5 billion from the $5 billion company officials announced just a few months ago.
The tech sector’s upturn helped send Dow components Microsoft and Intel modestly higher. Other prominent tech-sector gainers included Apple Computer, which closed up 4.3 percent, at a new 52-week high of $59.95, and video-game publisher Electronic Arts, which surged 8 percent, to $60.23, after reporting an upside earnings surprise.
Local stocks: WMS Industries tumbled 15 percent, to a new 52-week low of $21.43. The Waukegan-based maker of lottery equipment and gambling machines reported profits late Tuesday that fell short of forecasts. At least three Wall Street analysts lowered their ratings on the company’s stock to “neutral” from “positive.”
– Shares of Tribune Co., publisher of this newspaper, advanced 2.8 percent, on two times normal volume, to $32.35. In fact, the battered publishing sector as a whole enjoyed a significant rise after Knight Ridder’s biggest stockholder on Tuesday publicly called for the newspaper company to put itself up for sale.
The suggestion from disgruntled stockholder Private Capital Management sent Knight Ridder shares up 9 percent Tuesday, and the stock of the nation’s second-largest newspaper chain rose 1.9 percent Wednesday, to $59.08.
Investors bid up shares of other newspaper companies as well. The New York Times rose 2.9 percent, to $28.03; Belo, publisher of the Dallas Morning News, increased 2.7 percent, to $22.67; and USA Today publisher Gannett gained 2.6 percent, to $64.98.
But the mini-rally may be wishful thinking. The issues that have driven newspaper stocks down 25 percent or more over the past year are clear: steadily declining readership, particularly among younger consumers, combined with increasingly tough competition for advertising dollars from Internet-based news outlets.
In comparison, the significance of Private Capital’s move is much murkier. A number of observers have pointed out that most potential Knight Ridder buyers would likely be deterred by the negatives that continue to dog the sector.
While the investor is trying to put Knight Ridder in play, “industry fundamentals are unchanged and remain very challenging on a near-term basis,” noted Goldman Sachs analyst Peter Appert. “We don’t view Private Capital Management’s move as the first step in an industry consolidation.”
The activity surrounding Knight Ridder shares is reminiscent of a brief flare-up in the price of Wall Street Journal publisher Dow Jones three months ago, “when takeover speculation surrounding DJ fueled a short-lived sector rally,” Appert added.
Investors, he suggested, should “use any sustained rally as an opportunity to reduce exposure to the [publishing] group.”
Not everyone was as dour about prospects for a Knight Ridder deal. Deutsche Bank Securities raised its rating on Knight Ridder to “hold” from “sell,” saying “the probability of a transaction is high.”
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