BLUE chips in the United States recovered ground on Friday as falling oil prices offset a profit warning from aluminium-maker Alcoa, while a tech rally was fuelled by software-maker Oracle Corp. The technology-laced Nasdaq gathered steam during the session after Oracle got the green light from a US federal judge for its US$7.7 billion (S$13.1 billion) proposed takeover of smaller rival software group PeopleSoft. That spurred rises in software stocks, on speculation there could be more mergers in the industry. But Alcoa, the world's top producer of primary aluminium, fell almost 8 per cent after warning a day earlier that third-quarter results would fall short of Wall Street expectations. The Dow Jones industrial average, down for most of the session, ended up 23.97 points, or 0.23 per cent, at 10,313.07. The Standard & Poor's 500 Index rose 5.54 points, or 0.50 per cent, to 1,123.92. The Nasdaq Composite Index closed up 24.66 points, or 1.32 per cent, at 1,894.31. For the week, both the Dow and S&P closed higher, marking the fifth consecutive week of gains for both indexes. The Dow ended up 0.52 per cent, while the S&P advanced 0.92 per cent. The Nasdaq ended the week 2.7 per cent higher, its largest percentage increase in three weeks, informs Reuters. According to the Forbes, a sharp decline in oil prices and a surprise drop in wholesale prices pushed stocks higher in late trading Friday, easing investors' concerns about third quarter earnings after profit warnings from Dow component Alcoa Inc. and Visteon Corp. Oil prices fell sharply, once again moving below $43 per barrel after spiking higher on Thursday. A barrel of light crude was quoted at $42.83, down $1.78, on the New York Mercantile Exchange. Investors welcomed the 0.1 percent drop in the Producer Price Index, the Labor Department's measure of wholesale prices, since the news was a strong sign that the economy has still managed to keep inflation at bay despite this summer's rising oil costs. The warning from Alcoa, which slashed its third-quarter forecast by about 40 percent, weighed heavily on investors' minds and kept the Dow Jones industrial average lower for most of the session. Automotive systems manufacturer Visteon's warnings drove new fears about the health of the auto market and consumer spending in general. After defiantly warding off rival Oracle Corp.’s $7.7 billion hostile takeover for 15 months, business software maker PeopleSoft Inc. finds itself backed into a corner, with its best chances for escape tied to forces beyond its control. Swayed by a pivotal antitrust decision that bolsters Oracle’s bid, PeopleSoft’s stock advanced closer to the current all-cash offer of $21 per share. PeopleSoft’s shares surged $1.84, or 10 percent, to close at $19.88 Friday on the Nasdaq Stock Market, where Oracle’s shares gained 53 cents to $10.46. Industry analysts still believe Oracle might sweeten the pot – which it could afford to do – to soften PeopleSoft’s staunch resistance. The software giant likely will have about $10 billion in cash by the end of this year, estimated analyst Tad Piper of Piper Jaffray, and also can draw upon a $5 billion credit line, publishes Journal Gazette.
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