WALL STREET

STOCKS CLIMB, CAPPING BIGGEST THREE-DAY RALLY SINCE NOVEMBER

American stocks rose, capping their biggest three-day rally in six months, after a consumer-price report suggested the economy can sustain growth without sparking inflation, and oil prices dropped below $48 a barrel. Financial companies including Citigroup gained as the report signaled the Federal Reserve may be closer to ending its series of interest-rate increases. Raw-material producers such as Alcoa jumped after industrial production in China, one of the world’s fastest-growing economies, exceeded estimates. The Standard & Poor’s 500 index added 11.76, or 1%, to 1,185.56. The Nasdaq Composite Index rose 26.50, or 1.3%, to 2,030.65. The Dow Jones industrial average climbed 132.57, or 1.3%, to 10,464.45. Hewlett-Packard, the largest printer maker, had the measure’s biggest advance after new Chief Executive Mark Hurd said he is crafting a plan to slash costs. All three benchmarks had their best three-day performance since November. Both the S&P 500 and Dow industrials closed at their highest since April 12.

– Bloomberg News

ADVERTISING

MORGAN STANLEY INSTITUTES NEW ‘PULL AD’ PRESS POLICY

Embattled financial giant Morgan Stanley informed key publications of new guidelines that require its ads to be pulled when negative stories about it are published, Ad Age reported yesterday. A major target of the new policy is the Wall Street Journal in which Morgan Stanley placed $10.5 million in advertising last year, Ad Age said. “In the event that objectionable editorial coverage is planned, agency must be notified as a last-minute change may be necessary. If an issue arises after-hours or a call cannot be made, immediately cancel all Morgan Stanley ads for a minimum of 48 hours,” reads a key section of its planned addition to ad contracts, according to executives who’ve seen it, Ad Age reported. But with the editorial-advertising wall at most publications, the guidelines could prove nearly impossible to accommodate. “It would not be a practical condition at the Wall Street Journal,” said Publisher Karen Elliott House, according to Ad Age. “The ad department has no knowledge of what stories are running in the next morning’s newspaper.” Among the publications that have received that directive or have had other discussions concerning Morgan Stanley with its ad-buying agency, Publicis Groupe’s Starcom USA, according to executives with first-hand knowledge of the situation, are Gannett’s USA Today; Pearson’s Financial Times and the Economist; McGraw-Hill’s Business Week; the New York Times, and Time’s Fortune.

– Staff Reporter of the Sun

REGULATORY

TREASURY MODIFIES ‘USE IT OR LOSE IT’ RULE

Companies can give workers extra time to spend money built up in their flexible spending accounts, the Treasury Department and Internal Revenue Service said yesterday. The Treasury ruling seeks to provide relief to the much-criticized “use it or lose it” rule, where workers have to forfeit any unspent funds in these flexible spending accounts, or FSAs, at the end of the year. Workers use funds in the tax-advantaged accounts to pay for unreimbursed medical expenses and similar items. The ruling gives workers an extra 2 1/2 months to spend the funds at the end of the year.

– Dow Jones Newswires

FED GOVERNOR EDWARD GRAMLICH TO RESIGN AUGUST 31

Federal Reserve Governor Edward Gramlich, an outspoken critic of President Bush’s plan to partly privatize Social Security, will leave the central bank effective August 31 after serving seven years. Mr. Gramlich, 65, will return to the University of Michigan, where he was dean of the School of Public Policy from 1995 through 1997, the Fed said in a statement yesterday in Washington.

– Bloomberg News