- The Washington Times - Saturday, October 6, 2001

NEW YORK (AP) The prospect of government help for the economy bolstered Wall Street once again yesterday as President Bush's call for a stimulus plan pulled stocks out of a moderate slump.
Mr. Bush's comments helped the market shake off earnings warnings from Sun Microsystems, AMD and Gateway and allowed technology to claim its first four-day winning streak since June. The market's advance was similar to gains it made Wednesday when Mr. Bush also urged Congress to approve up to $60 billion in tax cuts.
Analysts said the market was not surprised by a report on the nation's unemployment, which remained at 4.9 percent in September as companies slashed 199,000 jobs last month, the largest job loss in more than a decade. The Labor Department's report showed that the labor market was still under intense pressure before the Sept. 11 terrorist attacks.
Still, investors were wary of making big commitments because an economic turnaround is still uncertain at best. Analysts say any gains on Wall Street will be vulnerable while investors await signs that business is improving and while it's still unknown how the United States will retaliate for the attacks.
"We're going to be going sort of day to day as far as what our feeling is on stock prices, based on the economic and political events," said Arthur Hogan, chief market analyst for Jefferies & Co. "It's still a very tenuous time."
The Dow Jones Industrial Average closed up 58.89 at 9,119.77 after sagging most of the day. The blue chips have now recouped 884 points, or nearly 65 percent, of the 1,369 lost in the first week of trading after last month's terrorist attacks.
For the week, the Dow rose 272.21, or 3.1 percent.
Like the Dow, broader market indexes ended higher yesterday after falling in earlier trading. The Nasdaq Composite Index rose 7.99 to 1,605.30, having climbed more than 120 in the past four sessions. The last time the tech-focused index had four consecutive wins was June 26-29.
For the week, the Nasdaq gained 106.50, or 7.1 percent.
The Standard & Poor's 500 index inched up 1.76 to 1,071.38 yesterday, ending the week up 30.44 or 2.9 percent.
Before Mr. Bush spoke yesterday, the string of warnings had halted the high-tech rally sparked by positive earnings outlooks from Cisco Systems on Tuesday and Dell Computer on Wednesday.
The warnings from Sun, AMD and Gateway weren't surprising to analysts, who had already cautioned investors about their newfound enthusiasm for tech stocks. They said it's too soon for a rebound as companies continue to struggle with excess inventory and slumping demand.
The market should be skeptical of bullish comments from high-tech companies as it was before the terrorist attacks, said Richard A. Dickson, a technical analyst at Hilliard Lyons in Louisville, Ky.
"How many times have we heard this from tech?" Mr. Dickson said of the positive comments from Dell and Cisco.
The companies that warned yesterday were mixed. AMD, the computer-chip maker, fell 40 cents to $8.60 after forecasting bigger-than-expected third-quarter losses.
But Sun rose 58 cents to $9.87, despite warning of a wider loss for its fiscal first quarter, and Gateway, which issued a third-quarter warning, gained 15 cents to $5.
Dell, meanwhile, rose 24 cents to $22.56, and Cisco advanced 52 cents to $14.94 after each traded lower most of the day.
Outside of technology, many of the biggest gains came in safer havens, such as food and drugs. Procter & Gamble climbed $1.49 to $72.69, while Johnson & Johnson advanced $1.04 to $55.49.
Spurts of optimism and pessimism, such as those seen in yesterday's session, are likely to define trading for the remainder of the year as they did this past week, analysts said.
"My forecast going forward is that we don't have much more than 5 percent on the upside and downside," said Charles Pradilla, chief investment strategist at SG Cowen Securities.
Mr. Pradilla added that Wall Street is experiencing "a tug of war between pressure on profits and the traumatized consumer and extraordinarily low interest rates and the possibility of an enormous economic stimulus package."
Advancing issues just matched decliners on the New York Stock Exchange. Volume was 1.24 billion shares, below the 1.25 billion shares traded Thursday.
The Russell 2000 index, which gauges the performance of smaller company stocks, fell 2.07 to 414.97. The Russell registered a weekly gain of 10.10 points, or 2.5 percent.
Overseas markets were mixed yesterday. Japan's Nikkei stock average finished the day essentially unchanged. In Europe, France's CAC-40 lost 0.7 percent, Germany's DAX index fell 1.4 percent, while Britain's FT-SE 100 rose 0.4 percent.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide