- The Washington Times - Tuesday, February 26, 2002

NEW YORK (AP) An upbeat outlook from General Motors and a ratings upgrade of Sun Microsystems gave Wall Street a burst of enthusiasm yesterday, propelling stock prices sharply higher.
A strong housing report also contributed to investors' buoyant mood and helped the Dow industrials surge more than 170 points to their strongest close in six weeks.
But analysts remained wary about the market's ability in the near term to hold onto gains, given last week's fluctuations and ongoing fears about earnings and accounting practices. Buyers have been enticed by cheaper prices after the market's yearlong decline, rather than by a belief that business is poised for improvement.
The Dow soared 177.56, or 1.8 percent, to close at 10,145.71, the Dow's strongest close since Jan. 8, when it finished at 10,150.55.
The Dow's recent sessions have been quite choppy as the blue-chip index alternated between triple-digit gains and losses all last week. The Dow rose 133.47 on Friday.
"This is an example of the market's bipolar behavior, where we can be up over 100 points one or two days in a row and then give that back in the next day or two," said Alan Ackerman, executive vice president of Fahnestock & Co. "There is no indication that this rally will continue."
The broader market also advanced. The Nasdaq Composite Index rose 45.34, or 2.6 percent, to 1,769.88. The Standard & Poor's 500 index gained 19.59, or 1.8 percent, to 1,109.43. The Russell 2000 index, the barometer of smaller-company stocks, rose 3.12, or 0.7 percent, to 468.19.
General Motors rose $2.37 to $55.48 after raising its first-quarter and 2002 earnings estimates. GM, which cited better-than-expected sales in the United States, also said it is increasing planned production.
"That is the kind of news we need to start hearing, and then the market will focus on the economic recovery," said John C. Forelli, portfolio manager for Independence Investment LLC in Boston.
Other automakers benefited from GM's news. DaimlerChrysler climbed $1.85 to $39.73.
While economic reports have indicated business is strengthening, the timing of an economic turnaround is uncertain and investors are looking to company earnings outlooks as an indicator that business is improving. Analysts have said that when more companies boost profit projections, stocks are likely to begin a more sustainable rally.
"What we need is just some positive news from companies. Companies are reluctant to react positively to the economic news until they have their orders firmly in hand," Mr. Forelli said.
Blue-chip gains were widespread. Citigroup rose $1.39 to $43.79, while Wal-Mart gained 70 cents to $60.65. Both are Dow industrials.
"Remember the Dow is just 30 stocks, but it is acting very well," said Gary Kaltbaum, market technician for Investors' Edge Partners. "The Nasdaq is still wavering big time. We are still in a major bear market for technology."
Technology, which has suffered most of this year's selling, was lifted by Sun Microsystems. Sun advanced 80 cents to $8.87 after Banc of America raised its rating to "buy" from "market perform," citing an attractive stock price and solid prospects for growth in the second half of 2002.
Other tech winners included wireless provider Qualcomm, climbing $3.21 to $35.91 after reaffirming its forecast for the fiscal second quarter. Citrix Systems rose $1.26 to $14.76 on an upgrade from UBS Warburg to "strong buy" from "buy."
Investors also were heartened by a positive report on existing-home sales. The National Association of Realtors reported that sales last month reached a seasonally adjusted rate of 6.04 million, a 16.2 percent jump from the previous month.
Advancing issues outnumbered decliners about 9 to 5 on the New York Stock Exchange. Consolidated volume was light at 1.67 billion shares, below Friday's 1.69 billion shares.
Volume also was light all last week, an indication that investors remain guarded and that many are putting off big commitments to stocks.

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