US Investments Real Estate Stocks Shares

By David Stires

If Barrack is right that the U.S. real estate market is on the brink of a bust, what do you do if you’re knee-deep in homebuilding stocks? Or even real estate investment trusts (REITs)?

Let’s start with REITs, where the outlook is generally good. The vast majority of REITs are focused on the commercial sector, which hasn’t been as frothy as the housing market. If you invest in REITs through a mutual fund, as most folks do, you probably own a variety of commercial issues, from hotels to retail stores to offices. With forecasters predicting that the economy will continue growing at a 3% to 4% clip, the demand for these types of income-producing properties should remain solid.

Fund pros are particularly upbeat about hotel REITs. Star fund manager Ken Heebner has sunk more than 30% of his CGM Realty into the sector. His thinking: Hotel values are getting a boost from increased business travel. And developers in large cities are frenetically converting hotels into condos, creating a room shortage. You might also look for REIT funds that invest in Europe, a market Barrack still likes. One to consider: Alpine International Real Estate (EGLRX).

Now for the troublesome topic: homebuilding stocks. We’ve been optimistic. (See Hang on to the Homebuilders) But while Barrack is most worried about condos, his doomsday scenario would have a knock-on effect on homebuilders. And there are already signs of a slowdown. Homes are on the market longer in some areas, and mortgage rates are rising. On the other hand, studies show that people buy houses as long as the 30-year mortgage rate—currently 6%—stays below 8%. Population growth, fueled in part by immigration, is boosting demand for new homes. Plus, environmental and zoning regulations are tightening the supply of land. Those trends are intact. Finally, homebuilding stocks remain cheap. As a group, they trade for just eight times the previous 12 months’ earnings. That’s about 25% below their average P/E of 11 during the past 20 years.

With this much uncertainty, playing it safe seems smart. We wouldn’t put more money into housing stocks just now. And for investors who have loaded up on the builders, this might be a good time to take some profits.

Bold conviction, meet event risk. Oil above $60 a barrel, the specter of economic weakness and fears of inflation have combined to spook investors. Indeed, thanks to the recent stock-market slump, both the Dow Jones Industrial Average and the Standard & Poor’s 500-stock index are underwater for the year.

Yet such turmoil is par for the course. I got my first job in financial journalism 20 years ago, and I am still waiting for things to calm down. Consider what’s happened:

The Dow industrials plunged 22.6 percent on a single day in October 1987.

Japanese stocks peaked in 1989—and today are 65 percent lower.

Twice in a dozen years, stock investors were rattled when the U.S. went to war with Saddam Hussein.

The largest one-day point drop ever in the Dow industrials occurred when the market reopened after the Sept. 11, 2001, terrorist attacks.

The S&P 500 posted 20 percent-plus gains in five consecutive calendar years in the late 1990s—and then immediately got whacked with three consecutive losing years.

Yet, despite all this turmoil, many folks continue to insist that 10 percent is the typical annual return for stocks. Sure enough, the S&P 500 did indeed clock 10.9 percent in 2004.

But a “normal” year like 2004 is, in truth, far from normal. Over the past 20 calendar years, there have been just three years when the S&P 500’s annual return was above 6 percent but below 16 percent, according to Chicago’s Ibbotson Associates.

What about the other 17 years? Among them were nine years when the S&P 500 soared 20 percent or more and four years when it lost money.

Looking good. Thanks to this year’s lackluster market, stock valuations don’t look so terrible. The S&P 500 is at less than 19 times trailing 12-month reported earnings and the dividend yield now hovers around 2 percent. While that may be rich by historical standards, stocks look reasonable compared with 10-year Treasury notes, which yield less than two percentage points above the likely inflation rate.

That said, if we get a single scary headline, stocks could easily tumble 20 percent or more. Experts in behavioral finance have found that investors tend to be far too confident.

Real-estate investment trusts? Gold shares? Florida condos? Energy stocks? Overconfident speculators are convinced these highflying investments are a one-way ticket to wealth.

But a few years from now, we could be lamenting these investments the same way we now lament tech stocks bought in the 1990s. My advice: Never forget what happened to dotcom investors—and build your portfolio with well-informed trepidation.

Looking down. To that end, consider three key investment pitfalls: resurgent inflation, recession and sudden crises that shake investor confidence. In that last category, include the fallout from events like currency devaluations, political turmoil and terrorist attacks.

How would your investments perform in each scenario? In all three situations, money-market funds, Treasury bills and other “cash investments” would be the model of stability. But loading up on cash investments is no solution, because you won’t make money over the long run, once you figure in inflation and taxes.

Instead, to score decent gains, you’ve got to take more risk, and that means tapping into the stock and bond markets. But keep your overconfidence—and your portfolio’s risk level—in check.

Take bonds. You might spread your holdings across a mix of high-quality corporate and government bonds, inflation-indexed Treasurys, high-yield “junk” bonds and foreign bonds, knowing that only some of these sectors will do well at any one time.

For instance, if recession hits, junk bonds will get crushed as investors fear defaults. But your high-quality bonds should post gains, thanks to the likely fall in interest rates. Investors will also tend to flock to high-quality bonds, especially Treasurys, during crises of confidence.

On the other hand, conventional Treasurys would get pummeled by resurgent inflation. But in that environment, your inflation-indexed Treasurys should hold their own. And if the renewed inflation is sparked by an overheated economy, your junk bonds could notch impressive gains.

Foreign bonds, for their part, are a wild card, because currency moves are impossible to predict. That, however, is part of their allure.

When everything else fails, your foreign bonds may ride to the rescue, helping to prop up your portfolio’s performance. That will be especially true if the next crisis is triggered by worries over U.S. debt levels.

You can apply the same analysis to various classes of stocks, except the potential gains and losses are far larger. While an inflationary spike might dent stocks initially, shares should fare well longer term, as corporate earnings climb with inflation.

Recession would also cause short-term trouble for stocks. Meanwhile, it’s hard to know how shares will react to the next crisis. Given all that, you should spread your bets widely, always owning at least some bonds and allocating maybe 25 percent of your stock portfolio to foreign shares, 5 percent to real-estate investment trusts and 5 percent to gold stocks, commodities and other natural-resource plays.

REITs and natural resources should perform well if inflation picks up, and foreign stocks could save your portfolio if the dollar nose-dives. But who really knows? Investing is racked with uncertainty—and broad diversification is your best defense.

15th Oct 2005 NEW YORK —Wall Street ended the week with a sturdy advance Friday as mild inflation data and improving retail sales created a brighter economic picture and strong quarterly earnings at General Electric Co. bolstered the gains. Nonetheless, the major indexes finished lower for the week.

At the close of trading, the Dow Jones industrial average gained 70.75, or 0.69 percent, to 10,287.34.

Broader stock indicators also finished higher. The Standard & Poor’s 500 index added 9.73, or 0.83 percent, to 1,186.57, and the Nasdaq composite index rose 17.61, or 0.86 percent, to 2,064.83.

For the week, the Dow lost 0.05 percent, the S&P 500 slid 0.78 percent and the Nasdaq dropped 1.22 percent.

BB&T reports record net income of $442 million

WINSTON-SALEM, N.C.—BB&T Corp. reported record third-quarter income Friday of $442 million or 80 cents per diluted share. Net income increased 7.1 percent compared with $412.9 million earned in the third quarter of 2004. Diluted earnings per share for the quarter increased 8.1 percent compared to 74 cents during the same period last year.

Average loans and leases totaled $72.7 billion for the quarter, reflecting an increase of $2.3 billion, or 13.1 percent on an annualized basis, compared to the second quarter of 2005.

Tower Automotive plans to close Tennessee plant

GRANITE CITY, Ill.—Auto parts supplier Tower Automotive Inc., which declared bankruptcy earlier this year, said it plans to close its plant here by the end of 2006, eliminating about 325 jobs.

Tower also plans to close its Milan, Tenn. plant, affecting about 290 jobs.

Novi, Mich.-based Tower filed for bankruptcy protection in February, citing lower auto production volume and high steel prices. It since has laid off hundreds of employees, including some in Granite City, and closed at least four other plants.

Judge lets Winn-Dixie out of several leases

JACKSONVILLE, Fla.—Winn-Dixie Stores Inc. received approval Friday by a federal bankruptcy judge to reject leases on three distribution centers, two dairies and a pizza company, saving the bankrupt supermarket chain $700,000 a month.

U.S. Bankruptcy Judge Jerry Funk, in a hearing lasting about five minutes, approved Winn-Dixie’s plans to close distribution centers in Atlanta, Charlotte, N.C., and Greenville, S.C. He also approved rejecting leases for dairies in Greenville, S.C., and High Point, N.C., and a pizza plant in Montgomery, Ala.

Stephen Busey, an attorney for Winn-Dixie, said the lease rejections were part of Winn-Dixie’s plan to reduce its size to save money.

Budget deficit drops below last year’s record

WASHINGTON —The federal deficit hit $319 billion for the budget year just ended, down from last year’s record red ink though a surge in Katrina-driven spending threatens to drive it up again.

The improvement from the record $413 billion recorded in the 2004 budget year, which the Treasury Department reported on Friday, is largely due to a surge in federal revenues from an improving economy.

The figures were released three days before Congress returns from a recess and commences a struggle to cut $35 billion from federal benefit programs over the next five years to help defray hurricane recovery costs. Friday’s deficit figures underscored that even if lawmakers agree to such savings, they would have a barely visible effect on the overall red ink figure.

Yahoo said to join AOL’s powerhouse suitors

NEW YORK —Yahoo Inc. is considering buying a stake in America Online Inc., joining other Internet powerhouses interested in the company’s Web portal, a person close to the talks said Friday.

The discussions were described as preliminary and not as advanced as separate talks AOL parent Time Warner Inc. has had with Microsoft Corp. and Google Inc., which is considering a joint bid with Comcast Corp.

News Corp. has also expressed interest, but those discussions have largely ended, said the person, who spoke on condition of anonymity because the release of information was not authorized.

The interest in AOL comes as the company transforms itself from a declining business focused on providing dial-up access to a free content provider able to tap the recent boom in online advertising.

NEW YORK (AFX)—U.S. stock losses mounted Thursday afternoon after a government report showed the most inflationary growth in 15 years in import prices last month, ahead of Friday’s key release on consumer price data.

But Dow industrials component McDonald’s managed a gain on strong sales numbers and an improved profit outlook.

The Dow Jones Industrial Average was down 59.56 points at 10,157.35, as its loss for October reached 400 points. The S&P 500 was down 9.09 points at 1,168.59 and the Nasdaq Composite down 8.27 points at 2,029.20.

Breadth was decisively negative, with 23 falling stocks for every seven issues on the rise on the New York Stock Exchange. In the Nasdaq market, losers outpaced winners by 17 to 10. More than 1 billion shares traded on the NYSE and more than 1 billion stock moved in Nasdaq market.

Stocks opened lower, and then briefly traded higher after news of a weekly increase in U.S. crude inventories. By midday the market was under selling pressure once more, under the grip of the inflation fears that have weighed on the market all week.

“It doesn’t take much to push stocks lower in this market,” said Art Hogan, chief market strategist at Jefferies & Co. “Stocks have been headed in a downward direction for a while.”

“We have extremely large concerns about inflation, high interest rates and high energy prices,” Hogan said. “There is great concern that we don’t know how much earnings growth will decelerate over the next two quarters.”

Ned Riley, of Riley Asset Management, predicted market action will be dull ahead of Friday’s release of the consumer price index for September, reflecting how the market this week has been in thrall to inflation concerns.

“It will be one of those days where we wait and see and hope and pray that tomorrow’s CPI data will not be taken with too much negativity,” Riley said.

“As we near the CPI data, I expect to see uncertainty and lack of conviction on the part of buyers,” he said.

Market participation was light as many investors were absent for Yom Kippur observance.

Earlier the Labor Department said that prices of goods imported into the U.S. climbed 2.3% in September, the highest in 15 years. Economists surveyed by MarketWatch had expected a gain of just 0.9%.

Prices for imported natural gas rose 28.8% in September, as imported oil prices rose 7.3%,

Federal Reserve officials have dropped strong hints that they believe inflation remains the greatest concern to the economy. Analysts expect the Fed to raise interest rates at the central bank’s Nov. 1 policy meeting.

Separately, the Commerce Department said the trade gap widened to $59 billion in August, in line with expectations, with the deficit with China widening to a record $18.5 billion.

In addition, jobless claims fell slightly in the latest week.

The yield on the benchmark 10-year Treasury note, closely monitored by investors worried about rates and inflation, continued to flirt with the 4.5% level. The benchmark note last was down 12/32 at 98-1/32 with a yield of 4.494%.

Crude-oil futures fell under $63 a barrel Thursday after a U.S. government report revealed the first buildup in crude inventories in seven weeks.

Crude futures last were down $1.37 at $62.75 as natural gas futuers fell 35.4 cents to $13.17.

The dollar was supported by market perception that the Fed’s likely to continue raising rates into 2006, after limited reaction to the trade-gap news

The dollar last was up 4.7% at 114.76, after earlier trading above 115 yen for the first time in two years. The euro fell 0.04% to $1.1981.

Gold for December delivery backed away from recent highs, undercut by the dollar’s continuing strength, and closed down $2.80 at $473.80 an ounce. Gold futures hit an 18-year high earlier in the week and have dropped $10 since then.

Stocks in focus

The decline in energy prices weighed on oil and gas stocks, pushing the Amex oil index down 3.5% to 949.97. Cheasapeake Energy Corp. fell 7.9% to $30.57.

Banking stocks continued to trade at weak levels due to the worries about prospects for rate hikes to come. The Amex Securities Broker/Dealer index fell 1.8% to 165.85.

After plunging this week, shares of Refco Inc. were halted, pending news.

On Wednesday, the company’s former leader, Phillip Bennett, was charged with securities fraud. U.S. officials alleged he was involved in an alleged scheme that duped thousands of investors in the futures broker’s August initial public offering.

McDonald’s Corp. gained as much as 2.8%, then pared gains in the midafternoon, after the fast-food chain reported strong September sales and served up profit projections that outpaced Wall Street’s expectations, partly due to a rebound in Europe.

DuPont , also in the Dow, fell by as much as 1.7% after confirming plans to repatriate $9.4 billion by the end of the year and said it will spend $115 million to replace equipment damaged by Hurricane Katrina.

Johnson & Johnson rose as much as 2.9% after a generally favorable mention in a press report.

Internet stocks were in play. The Wall Street Journal reported that numerous suitors want to buy a stake in American Online, the Time Warner Inc. subsidiary. Names mentioned now include search-engine company Google and Comcast Corp. , the cable-television giant.

Shares of Time Warner were up as much as 1.2%, but came off its highs in afternoon trade.

HCA gained as much as 2.1%, but later fell as much as 1%,. The hospital operator steered third-quarter profit estimates lower and announced plans to buy back up to $2.5 billion in a modified “Dutch” auction for between $43 and $50 a share.

This story was supplied by MarketWatch. For further information see www.marketwatch.com.

12th Oct 2005

NEW YORK — Troubles in the technology sector pushed Wall Street’s major indexes to their lowest levels since mid-May Wednesday, with Apple Computer Inc. and a downgrade of Intel Corp. leading the market downward.

Investors’ worries about consumer spending intensified after Apple’s lower-than-expected third-quarter revenues. The market got more troubling news from Prudential’s downgrade of Intel, which said the company could face disappointing revenues and margins for as long as the next year.

The company news hit an already bruised market, as it followed nasty declines on Wall Street last week.

The Dow Jones industrial average fell 36.26 to 10,216.91.

The Standard & Poor’s 500 index fell 7.19 to 1,177.68, while the technology-focused Nasdaq composite index fell 23.62 to 2,037.47.

Climbing oil prices exacerbated worries about energy costs. A barrel of light crude quoted climbed 59 cents to settle at $64.12 on the New York Mercantile Exchange.

By Caroline Valetkevitch
Tue Oct 11, 2005 2:46 PM ET

NEW YORK (Reuters) – U.S. blue-chip stocks rose

on Tuesday after minutes from the last Federal Reserve policy-makers’ meeting provided mild relief to investors and as IBM shares climbed after the computer maker was upgraded for a second time this week

According to minutes of their September meeting released Tuesday afternoon, Fed policy-makers believed more interest-rate increases would be needed to keep inflation tamped down when they nudged credit costs up three weeks ago. The policy-setting Federal Open Market Committee raised the overnight borrowing rate by a quarter-percentage point on September 20.

The Dow Jones industrial average was up 38 points, or 0.37 percent, at 10,276. The Standard & Poor’s 500 Index was up 0.74 of a point, or 0.06 percent, at 1,188.07. The technology-laced Nasdaq Composite Index was down 9.90 points, or 0.48 percent, at 2,069.02.

“It was a more dovish comment than we’ve heard in a long time,” said Mike O’Hare, head of listed trading at Lehman Brothers. “I think people are perceiving that the worst is baked in. But it’s inevitable that we’re going to have more rate hikes.”

Shares of International Business Machines Corp. (IBM.N: Quote, Profile, Research) rose 2.7 percent to $83.46 on the New York Stock Exchange.

The Nasdaq Composite Index, meanwhile, fell from weakness in semiconductor companies following a sales warning on Monday from Xilinx Inc. (XLNX.O: Quote, Profile, Research). Xilinx fell 2.2 percent to $22.28.

SAN FRANCISCO (AFX)—International Business Machines Corp. gained more ground Tuesday as Credit Suisse First Boston became the second brokerage this week to raise its rating on the computing technology giant.

IBM rose $1.88, or more than 2%, to $83.15 after CSFB analyst Andy McCullough raised his rating on the stock to outperform from neutral. McCullough’s upgrade came a day after Citigroup analyst Richard Gardner raised his opinion on IBM’s stock, a Dow Jones Industrial Average component, to strong buy from buy.

In a research note, McCullough said several recent moves by IBM are behind his upgrade.

McCullough cited IBM’s shipping of a new mainframe computer system in September as a catalyst to “drive renewed growth in IBM’s most-profitable hardware franchise” through 2006.

Better mainframe sales should also have a positive effect on IBM’s software business, McCullough noted.

Additionally, IBM should begin to see margins improve as it proceeds with a restructuring plan that will cut about 13,000 jobs from its work force of more than 300,000 employees, according to the analyst. The restructuring plans could end up saving IBM an estimated $1.3 billion in 2006.

McCullough added that he expects IBM to meet analysts’ consensus estimate calling for a profit of $1.13 a share when the company reports third-quarter results on Oct. 17.

However, McCullough raised his full-year earnings forecast on IBM to $5.50 a share from $5.30, and increased his 12-month price target on IBM’s stock to $95 from $85 a share.

This story was supplied by MarketWatch. For further information see www.marketwatch.com.

NEW YORK (Reuters) Tue Oct 11, 2005 1:14 AM IST - U.S. blue-chip stocks extended losses on Monday as General Motors Corp. said auto parts supplier Delphi Corp.’s bankruptcy filing could cost it as much as $12 billion and as investors braced for a flood of earnings reports.

Technology shares eased after Xilinx Inc., which makes programmable microchips, cut its sales estimate for the September quarter, citing weakness in Asia-Pacific demand and other factors. Its stock fell 15.6 percent to $22.89 on Nasdaq.

Energy shares also weighed on the broader market after crude oil prices slipped. Exxon Mobil Corp. fell 1.9 percent to $58.50 on the New York Stock Exchange. The stock was one of the biggest drags on the Dow and the S&P 500.

The Dow Jones industrial average was down 39 points, or 0.39 percent, at 10,253.33. The Standard & Poor’s 500 Index was down 7.56 points, or 0.63 percent, at 1,188.34. The technology-laced Nasdaq Composite Index was down 9.70 points, or 0.46 percent, at 2,080.65.

“It is a semi-holiday and volume isn’t what it normally is, (but) Delphi is weighing on the whole automotive industry,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York, referring to the U.S. Columbus Day holiday. “More people want to move money out of that sector, and the situation is not going to get better anytime soon.”

He also said investors are waiting to see the effect of oil prices on company earnings.

“Given the spike in oil during the third quarter, I think we’re going to see higher oil costs in manufacturing companies and lower sales in consumer companies from oil squeezing out other purchases,” Ghriskey said.

U.S. crude futures for November delivery declined just 4 cents to settle at $61.80 a barrel after falling as low as $60.35 earlier in the day.

Delphi, the No. 1 U.S. auto-parts supplier, filed for bankruptcy on Saturday, leading GM, which spun off Delphi in 1999, to warn of the possibility of costly supply disruptions.

GM shed 8 percent to $26.05 on the NYSE. Brokerage Banc of America cut its rating on the stock to “sell” from “neutral,” citing possible risk from Delphi. S&P cut its credit ratings on General Motors deeper into junk status.

Standard & Poor’s and Fitch cut ratings on Delphi.

Delphi shares plummeted 66 percent to 38 cents on the NYSE.

Blue-chip losses were limited by International Business Machines Corp., whose shares rose 1.1 percent to $81.35 on the NYSE after Citigroup upgraded its rating on IBM to “buy” from “hold.”

NEW YORK (AFX) 10th Oct 2005—U.S. stocks were weaker Monday, as General Motors slid 6% and other auto stocks sold off in the wake of Delphi’s bankruptcy filing and as warnings from Northrop Grumman, Xilinx and others compounded the negative sentiment.

The Dow Jones Industrials declined 8.75 points to 10,283.56, the S&P 500 dropped 4.76 points to 1,191.14, and the Nasdaq composite shed 4.70 points to 2,085.65.

In the broad market, declines outnumbered advances by a 20 to 11 margin on the NYSE and by a 16 to 12 score on the Nasdaq market.

Volume was light due to the Columbus Day holiday, with more than 907 million shares traded on the NYSE as over 889 million shares moved on the Nasdaq.

Stocks opened higher but later weakened, although both gains and losses were slight and trade was quiet.

Gordon Fowler Jr. said, “The markets seem destined to muddle through the next few months trying to figure out whether the economy is going through temporary or longer lasting troubles.”

“There’s not a lot of action today,” said Michael Malone, a trading analyst at SG Cowen. “It’s going to be a quiet session. The market sold off considerably last week and Alcoa reports tonight, kicking off earnings season. People seem to be waiting to see what the earnings and guidance look like.”

Investors are unusually eager for the third-quarter reports because they have been uncertain about how much recent hurricanes and soaring energy prices have cut into corporate profit.

“The market is currently facing a lot of headwinds,” in the form of inflation, higher rates and the possibility of a weak third-quarter earnings season, said Michael Sheldon, chief market strategist at Spencer Clark.

“It needs a catalyst to move higher,” Sheldon said. “We think the most likely one would be a sustained decline in energy prices. But barring that, we expect to see consolidation with a downward bias.”

Energy futures contracts continued their recent downward trend, lending a measure of support to equities. The contracts have been backing off records on the perception that consumers will cut back on their energy usage and blunt demand.

Crude futures last were down 84 cents at $61 a barrel as natural gas futures slid 36.6 cents to $12.86 per million British thermal units.

Gold for December delivery last was up 30 cents at $478 an ounce, after touching an 18-year high past $480.

December copper futures earlier hit a record price of $1.821 a pound, after rising 1.25 cents on the session. See

The dollar was higher, trading up 0.5% at 114.25 yen as the euro fell 0.6% to $1.2057. The buck rose gains the euro as traders said the new German leadership resolution may not offer a sure path for passing the economic reforms necessary to recharge the euro-zone’s economy.

The bond market is closed for Columbus Day and no economic reports were scheduled for Monday.

Stocks in motion

The Dow Jones U.S. Automobiles and Parts Index was down 6.6% at 185.54.

Delphi shares fell 58% to 47 cents after the auto parts maker filed under the bankruptcy laws on Saturday. The filing, linked to high wage and benefit expenses, was the largest in the history of the domestic auto industry.

Shares of Delphi’s former parent, General Motors , a Dow component, were 6% lower at $26.62, after S&P downgraded the company’s long- and short-term debt.

GM also was downgraded to sell at Banc of America, which said that the possibility that the company will file for bankruptcy has risen to 30% from 10% in the wake of the Delphi filing.

Among other auto makers, Ford was down 3% at $8.96.

Dana Corp. was 31% lower at $6.38. The auto systems company Monday said it will have to restate earnings for 2004 and part of 2005 and delay its third-quarter report, due to accounting-controls issues.

Visteon , which also makes auto parts, was down 3.6% at $8.69.

Northrop Grumman fell 19cents to $53.86. The defense contractor said hurricane damage to its shipbuilding operations in Louisiana and Mississippi will cost $1 billion and knock earnings lower.

Shares of Flir Systems dropped 13% to $24.19 after the maker of thermal imaging systems gave a third-quarter profit and revenue outlook that did not meet Wall Street expectations.

Xilinx Inc. skidded 12.6% to $24.36. The chip maker revised down fiscal 2006 September quarter sales estimates to a sequential decline of 1% to 2%, compared with a prior estimate of flat to 4% growth.

IBM last was up 1.9% at $82.07 after Citigroup upgraded the Dow component to buy from hold, saying the company is gaining market share in the mid-range and high-end server market. See .

Dell rose 2.3% to $32.79, helped by an upgrade by Needham.

Wal-Mart gained 1.9% to $44.89 after the world’s biggest retailer reaffirmed its October sales growth forecast. In addition, the business weekly Barron’s suggested the stock was trading at a bargain price.

Jefferson-Pilot Corp. was up 6.2% at $53.97 after Lincoln National Corp. bid $7.5 billion for it, in one of the biggest acquisitions in the financial sector in recent months.

This story was supplied by MarketWatch. For further information see www.marketwatch.com.