- The Washington Times - Wednesday, August 7, 2002

NEW YORK (AP) A wave of bargain hunting revived stocks yesterday, sending the Dow Jones Industrial Average up as much as 374 points before profit-taking whittled the advance down to 230.
Analysts said the pullback reflected Wall Street's apprehension about the future. While the relatively low stock prices of recent sessions are alluring, a spate of disappointing economic news this month has worried investors. As a result, they have more incentive to lock in profits during a rally rather than risk losing those gains if the market falls further.
The Dow closed up 230.46, or 2.9 percent, to close at 8,274.09. It was the average's first triple-digit gain in more than a week, and it followed a three-day, 692-point losing streak.
The market's broader stock indicators also closed higher, though they too retreated late in the session. The Standard & Poor's 500 Index climbed 24.97, or 3.0 percent, to 859.57, and the Nasdaq Composite Index rose 53.44, or 4.4 percent, to 1,259.55.
"After a handful of days of selling off, we were probably due for a little bit of bounce. But this is nothing that you want to start pounding the table and shouting that the new bull market has begun," said Charles White, portfolio manager at Avatar Associates.
Some buying was to be expected after the market's big losses over the past few sessions, but the extent of yesterday's surge caught many by surprise. Still, the late retreat suggested the gains were just a rebound, rather than the beginning of a significant turnaround. In the past two years, Wall Street has repeatedly rallied only to pull back on later selling.
Some of yesterday's biggest gains were in financial stocks, which had pulled back on concerns about the banking industry and financial crises overseas. J.P. Morgan rose $1.30 to $23.65, while Citigroup advanced $1.75 to $30.40.
Technology stocks also fared well. Advanced Micro Devices rose 75 cents to $8.32, while Oracle gained 32 cents to $9.33.
Investors were selective with their enthusiasm, however.
AOL Time Warner fell 5 cents to $9.90 on news that it had named former cable-TV executive Jonathan Miller as head of its America Online division. The division has come under scrutiny amid its falling stock price and questions about its accounting practices.
Also, in after-hours trading, Cisco Systems rose 32 cents to $12.39 on slightly better-than-expected earnings, adding to a 71-cent gain during the day, before earnings were released. The stock had dropped sharply Monday because of anxiety about those results, and many investors were looking to Cisco as a bellwether.
Yesterday's upturn cut short a three-session decline on the market that had sent the Dow briefly back below its post-September 11 low of 8,235.81 and the Nasdaq to a new five-year low.
Analysts hesitated to read much more into it than bargain hunting, however, noting that nothing fundamental had changed from the conditions that provoked the most recent declines. Economic data suggesting that business is slowing have yet to be disproved, and most companies' forecasts are cautious.
Wall Street also has a history of rallying but being unable to sustain the gains. The volatility has been especially intense this summer, with the major indexes alternating between sharp declines and advances. The Dow rose 1,009 points in late July, only to give back roughly two-thirds of that within a week.
Still, retail sales figures due out today could provide a catalyst for buying if the results are stronger than expected. Wall Street is also hoping the Federal Reserve will decide to further lower interest rates at its meeting next week. But in the meantime, the fluctuations will likely continue.
"The market is going to have to prove to investors that it can hold onto a gain for some time before you're going to have a lot of believers," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "I'm not sure I'm a believer myself, at least in this bounce."
Advancing issues led decliners nearly 3 to 1 on the New York Stock Exchange. Volume came to 1.5 billion shares, compared with 1.41 billion Monday.
The Russell 2000 index, the barometer of smaller-company stocks, rose 13.67, or 3.7 percent, to 380.79.
Overseas, Japan's Nikkei stock average fell 2.1 percent. In Europe, Germany's DAX index climbed 7.1 percent, Britain's FTSE 100 rose 3.4 percent and France's CAC-40 advanced 5.4 percent.

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