Wall Street report: Friday close

By GRAEME BEATON
Updated:

 

A LATE day rally overshadowed a rare hostile takeover bid and yet more accounting and disclosure investigations.

The Dow Jones Industrial Average jumped 133.47 points or 1.36% to 9,968.15, to finish up 0.7% on the week. The Nasdaq Index gained 8.30 points or 0.48% to 1,724.54, but still closed off 4.5% on the holiday-shortened week.

The $10.8bn.unsolicited bid in shares and debt for TRW, manufacturer of electronic products for the car, space and defence industries, by number three defence contractor Northrop Grumman caught traders by surprise. The mergers and acquisition business has been quiet since 11 September. TRW rebuffed the offer, which came two days after its chief executive announced his departure.

Northrup is the prime contractor for the B-2 bomber, the AWACS surveillance aircraft and owns shipbuilder Newport News. TRW shares leapt $10.50 or 26.4% to $50.30, $3.30 above TRW's bid on expectations that either another bidder will emerge or that Northrop will be forced to raise its offer. Northrop shares dropped $7.85 or 6.7% to $109.95.

Confirmation from business software maker Computer Associates that it was being investigated by the Securities and Exchange Commission and the US Attorney's office sent its shares down another $2.91 or 15.4% to $15.99. The company has denied suggestions it manipulated product sales to inflate its shares. JP Morgan slumped 95 cents or 3.3% to $28.19, near a new 52-week low, after it was reported that the US Federal Reserve was investigating its relationship with bankrupt Enron.

Other companies drawn into the accounting witch-hunt were mixed. Conglomerate Tyco International fell another 50 cents or 1.8% to $27.50. IBM rebounded $2.07 or 2.2% to $98.45. Cisco Systems erased an early loss to close ahead 13 cents or 0.9% to $15.24.

Circuit City, the second biggest US electronic goods retailer, plunged $7.04 or 30% to $16.55 after it cut its profit forecasts. Circuit City had been among retailers benefiting from so-called 'cocooning' in the wake of September's terrorist attacks as consumers snapped up video equipment. Other retailers weakened in sympathy. Rival Best Buy was marked down $3.04 or 4.3% to $67.61. Wal-Mart retreated 40 cents or 0.7% to $59.95. Do-it-yourself chain Home Depot eased 30 cents or 0.6% to $51.

Techs were mixed. Intel closed up fractionally at $29.53.Microsoft came off slightly to $57.99.

Investment bank Goldman Sachs dipped 47 cents or 0.6% to $79 despite a magazine report suggesting it could become a takeover target for bigger money centre banks. General Motors added $1.38 or 2.7% to $53.11 on kind words from a broker. ExxonMobil led the energy sector, jumping%1.57 or 4% to $40.72.

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