- The Washington Times - Thursday, March 7, 2002

NEW YORK (AP) Wall Street resumed its upward march yesterday, energized by more encouraging economic news. The Dow Jones Industrial Average recorded its third triple-digit gain in the last four sessions.

Blue chips surged for much of the day, but the advance in tech stocks came late in the session as still-cautious investors finally decided the beleaguered sector deserved their attention.

"This has really been a blue-chip rally, so the fact that tech stocks turned around really gave the market some support today," said Bryan Piskorowski, market commentator at Prudential Securities. "Slowly but surely, the reams of positive economic data are bringing buyers back as the market's psychology turns from bearish to neutral."

The Dow closed up 140.88, or 1.4 percent, at 10,574.29, rebounding almost completely from a 153-point loss the previous session. The average has advanced a total of 468 points since Friday.

Broader stock indicators also moved higher. The technology-focused Nasdaq Composite Index rose 24.11, or 1.3 percent, to 1,890.40, overcoming losses from earlier in the session. The Standard & Poor's 500 Index advanced 16.63, or 1.5 percent, to 1,162.77.

The blue-chip rally started early in the session on a report from the Commerce Department that showed orders to U.S. factories rose by 1.6 percent in January, lifted by stronger demand for cars, computers and machinery. The news was the latest indication that the country is emerging from recession. Last week, the market got a handful of similarly upbeat reports.

Investors flocked to financial stocks, sending banker J.P. Morgan up $1.54 to $34.05, a 4.7 percent gain. Pharmaceutical and manufacturing stocks also advanced, with Merck rising $1.21 to $62.67 and 3M climbing $1.42 to $121.57. General Motors rose $1.31 to $59.92.

"These are also the companies whose business benefits the most when the economy revives and are more reasonably valued today than the technology companies," said Charles G. Crane, strategist for Victory SBSF Capital Management.

Indeed, tech stocks meandered until late in the day, when the Federal Reserve released a survey of nationwide business activity suggesting that signs of a recovery became more widespread in January and early February.

Cisco Systems rose 26 cents to $16.77, while Intel gained 26 cents to $32.96, adding to Tuesday's run-up on speculation the chip-maker's profits would rise in an improving economy.

Telecommunications stocks also fared better, helped by Sprint's affirmation that its wireless and phone-service units would meet their 2002 goals. Sprint's wireless PCS group advanced $1.92, or 20.1 percent, to $11.47, while the long-distance phone service FON group rose $1.27 to $15.83.

Analysts say Wall Street's mood is gradually improving, but, after two losing years on the market, investors are still somewhat dubious that a rally can last. Amid all the excitement about the market's recent gains, there are persistent fears that stock prices particularly in the beleaguered tech sector have become too high, given what will likely be relatively mediocre profits this year.

"We're going to need to see some upward earnings revisions by companies for the rally to continue. I'd expect things to settle down over the next few weeks until we see if earnings are going to be there," said Robert Harrington, head of listed block trading at UBS Warburg. "If they're not, stocks will probably come off a little."

The sizable gains by blue chips could also make that sector subject to pullback. The Dow is up 5.5 percent from where it started 2002. By contrast, the Nasdaq is down 3.1 percent and the S&P has risen a more modest 1.3 percent.

Still, the market's increasingly bullish tone should help stocks hold steady and possibly rise modestly, as long as there aren't any surprises, such as more terror attacks.

Advancing issues led decliners 11 to 4 on the New York Stock Exchange in busy, but not the most vigorous trading that the market has seen in recent sessions. Volume came to 1.52 billion shares, compared with 1.54 billion Tuesday.

The Russell 2000 index rose 7.21 to 494.80.

Overseas, Japan's Nikkei stock average advanced almost 1 percent.

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