Stocks Rise After Quarterly Reports From Oracle, Bear Stearns; Economic Readings Mixed

Dec.20, 2007 in Market Outlook

Stocks opened higher Thursday as investors grew encouraged following Oracle’s strong earnings and after Bear Stearns reported its first-ever quarterly loss but didn’t confirm investors’ worst fears about the scope of troubles in the financial sector.

Late Wednesday, Oracle Corp. said its profit in the most recent quarter jumped 35 percent, well above analyst estimates, thanks to higher sales of licenses for new products.

Bear Stearns Cos. said that in the fourth quarter, turmoil in the credit market reduced the investment bank’s portfolio by $1.2 billion, leading to a hefty loss. Bear Stearns — now facing a lawsuit by Barclays PLC, which lost money over the summer when two of Bear Stearns’ hedge funds collapsed — has made bad investments in subprime mortgages like its Wall Street peers.

Investors also digested mixed economic data. The Commerce Department reported that gross domestic product grew at a 4.9 percent pace in the third quarter. The reading on the value of all goods and services produced in the U.S. for the July-to-September quarter was unchanged from an estimate a month ago. Economic growth for the fourth quarter is expected to have slowed to a pace of just 1.5 percent or less, however.

The Labor Department said workers seeking jobless benefits rose by a seasonally adjusted 12,000 last week to 346,000. The reading came as a surprise; economists had expected claims would rise to 335,000. While closely watched, the report is often volatile from week to week.

The dollar rose against other most major currencies Thursday, while gold prices fell.

In other earnings data, ConAgra Foods Inc. said its quarterly profit rose 15 percent, helped by strong performance from its commodities trading group. Chief Executive Gary Rodkin said he’s disappointed in how the company’s consumer foods segment has performed, but he believes that will change as new products and promotions are used. ConAgra fell 47 cents to $24.32.

FedEx Corp. fell 58 cents to $94.05 after posting a 6 percent decline in quarterly earnings amid high fuel costs and a U.S. economic slowdown. The company also issued a forecast that fell below expectations.

On Wednesday, stocks finished mixed after a volatile trading session as Wall Street grappled with a ratings downgrade on a bond insurer, a $9.4 billion writedown at Morgan Stanley and persistent worries about the economy.

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