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Dow posts triple-digit gain as McDonald's cooks up gains

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The major indexes along with sector action is broadly positive as the Dow Industrials (INDU) 8,440 +1.61% posts a 134-point gain with component McDonald's (NYSE:MCD) $16.81 +6.3% jumping higher after the fast food giant posted firs-quarter net income of $327.4 million, or $0.29 per share, which was a penny better than consensus.

The company said it would reduce capital spending by $800 million in 2003, which would be down 40% compared with 2002 and that over the next 12 to 18 month, the company said it will be "well on its way toward a 2005 goal of annual system-wide sales growth of 3 to 5%" and operating net income growth of 6 to 7%. MCD said revenues in the recently completed quarter rose 6% to $3.8 billion, which was above the $3.6 billion projected by analysts.

Sector action, which was broadly positive earlier this morning, but showing fractional gais has built to the upside. Financials were leaders out of the gate with the KBW Bank Index (BKX.X) leading sector gains with a 0.75% rise, but that's built to a 1.73% gain at 790.05. KBW sector members and Dow components Citigroup (NYSE:C) $39.32 +2.26% and JP Morgan (NYSE:JPM) 28.65 +2.36% striding higher.

Gains in Citigroup (C) come despite the Financial Times reporting that Citigroup will eventually be more heavily regulated that its peers in a $1.4 billion settlement of Wall Street's conflicts of interest to be announced later today, where investment banks are acknowledging the findings without admitting wrongdoing. At least three firms (Citigroup (C), Merrill Lynch (MER), Credit Suisse (CSR)) are said to have acted fraudulently, while others will be said to have acted in a dishonest or unethical manner. Although the charges are considered rule violations, they are considered civil, rather than criminal.

Two high-profiled analysts, Henry Blodget and Jack Grubman, will pay as much as $20 million in fines as part of the $1.4 billion settlement. Blodget was a well-known and Stree-followed Internet analyst at Merrill Lynch, while Grubman was a widely followed telecom analyst at Salomon Smith Barney. Both are expected to be barred for life from the securities industry.

All sectors now post gains with the exception of the Gold/Silver Index (XAU.X) 65.15 -0.57%, which trades down just fractionally. Leading sector gainers at this hour are the Airlines Index (XAL.X) 38.34 +2.98%, Networking Index (NWX.X) 157 +2.84%, Semiconductor Index (SOX.X) 333.67 +2.66% and Biotechnology Index (BTK.X) 371 +2.32%.

Treasuries, which found modest buying earlier this morning now finds YIELDs higher on selling, with the shorter-dated 5-year June futures contract (fv03m) $113'12 -0.13% off 5/32 and YIELD ($FVX.X) rising to 2.845%. The 10-year June futures contract (ty03m) $114'215 -0.14% slips 5/32 to YIELD ($TNX.X) 3.909% after testing its trying to round flat 50-day SMA of 3.58% earlier this morning.

Jeff Bailey

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