- The Washington Times - Tuesday, March 5, 2002

NEW YORK (AP) Investors bid stocks sharply higher yesterday with a broad advance that propelled the Dow Jones industrials up more than 200 points for a second straight session.
The rally reflected a growing consensus among investors that an economic recovery is beginning. Blue-chip and technology stocks soared despite an earnings warning from tech bellwether Oracle.
But analysts remained cautious.
"Today, there's no denying that the sentiment in the market is that a recovery is at hand, and that investors are willing to put money to work," said Charles White, portfolio manager at Avatar Associates. "The danger is that … we're not as strong as people believe."
The Dow closed up 217.96, or 2.1 percent, at 10,586.82, its best finish since July 19, when the average was 10,610.00. The Dow has advanced 479.93 since Friday, its biggest two-session point gain since December 2000.
Broader stock indicators also advanced. The tech-focused Nasdaq Composite Index gained 56.58, or 3.1 percent, to 1,859.32, recouping much of its recent losses, but still below where it started the year.
The Standard & Poor's 500 index advanced 22.06, or nearly 2 percent, to 1,153.84, barely above its 2002 debut.
It was the second-straight rally on momentum created by a barrage of good economic news last week, including strengthening manufacturing numbers and positive comments from Federal Reserve Chairman Alan Greenspan. Analysts also say Wall Street's mood is improving. Investors are looking for reasons to buy rather than to sell, as had been the case in previous weeks amid accounting scandals at Enron and other companies.
Among blue chips, J.P. Morgan rose $2.84 to $32.50. General Motors advanced $3.73 to $58.70.
Transportation stocks surged on better-than-expected revenue and traffic numbers from several airlines whose performances and stock prices lagged after the September 11 attacks. Continental Airlines rose $2.10 to $34.80, while American Airlines' parent company, AMR, climbed $1.80 to $29.05.
The Dow Jones transportation average, which tracks the broader sector, soared 152.83, or 5.3 percent, to 3,049.96.
The tech sector also benefited from Wall Street's inclination to spend. Cisco Systems rose $1.26 to $16.26, while rival Juniper Networks soared $1.90, or 19.3 percent, to $11.73.
Still, Oracle slid $2.32 to $13.67 after Merrill Lynch reduced its rating on the stock from "buy" to "neutral." The announcement followed the software maker's announcement Friday it was reducing estimates for its third-quarter results.
Analysts say Oracle's warning should be a reminder to investors that there are still obstacles ahead for the market. With more earnings warnings expected in coming weeks, prudence might be a good idea. They also note that stocks are still likely to move up incrementally and that investors, who have watched previous rallies fizzle, are still more inclined to take profits rather than risk losing them.
The economic recovery is also expected to be rather subdued, unlike the explosive growth that the market enjoyed in the late 1990s. That means profits might not rise as much as hoped and some stocks might be overvalued.
"Investors' nerves will likely be tested again, but for long-term investors, there's no need to sit on the sidelines," said Alan Skrainka, chief market strategist at Edward Jones of St. Louis.
Advancing issues led decliners nearly 3 to 1 on the New York Stock Exchange in heavy trading. Volume came to 1.59 billion shares, compared with 1.44 billion Friday.
The Russell 2000 index rose 9.66 to 488.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide