Markets surge behind bargain-hunting

Posted 7:43AM on Wednesday 1st May 2002 ( 23 years ago )

NEW YORK - Wall Street emerged at least temporarily from its slump Tuesday as bargain hunting lifted stocks in spite of another set of lackluster earnings and a dip in consumer confidence. Analysts cautioned against too much enthusiasm about the advance, however, noting that the market's pattern has been to rally and then pull back when investors' expectations fail to mesh with reality. Indeed, while stocks ended the day higher, the gains faded late in the session. "You're really just getting a snapback today," said Duncan Richardson, chief equity investment officer at Eaton Vance. "The stocks that were down the most last week are up the most today. But I don't think there's been any broader change." The Dow Jones industrial average closed up 126.35, or 1.3 percent, at 9,946.22, according to preliminary calculations, after rising as much as 186 earlier in the session. It was the Dow's first triple-digit gain in two weeks, but failed to propel the average back above 10,000. This is the third straight session the blue chips have spent below the psychologically important level. Broader stock indicators also moved higher. The technology-focused Nasdaq composite index gained 30.97, or 1.9 percent, at 1,687.90, while the Standard & Poor's 500 index was up 11.42, or 1.1 percent, at 1,076.87. Some buying had been expected following weeks of losses on mediocre earnings reports and cautious-to-pessimstic forecasts. Investors, who had hoped for firm signs a turnaround was under way, spent most of the month selling stocks and avoiding new commitments. As a result, the Dow dropped to levels not seen since mid February, while the Nasdaq and S&P fell back to their late October ranges. Although earnings Tuesday were not any more or less spectacular than others released previously, Wall Street was more willing to set aside some of its qualms - at least for the moment. Analysts said stock prices, which have fallen to 52-week lows and even new lows in some cases, were drawing investors to the market. Energy marketer Dynegy rose $4.18, or 30 percent, to $18, after meeting first-quarter expectations. The company last week lowered its forecast for the entire year, citing difficult market conditions. Qwest advanced 7 cents to $5.03 after affirming its 2002 targets despite a wider-than-expected quarterly loss. Financial stocks also surged, including Dow industrial J.P. Morgan, which rose 76 cents to $35.10. Other big Dow gainers were Boeing, which climbed 97 cents to $44.60, and Intel, which advanced 57 cents to $28.61. WorldCom rose 13 cents to $2.48 on news its chief executive and president Bernard J. Ebbers had resigned and would be replaced by vice chairman John Sidgmore. The troubled telecommunications company's stock fell to a new 52-week low Monday. The market shrugged off a decline in the Conference Board's Consumer Confidence Index - primarily because the loss had been expected. The Conference Board said the indicator fell to 108.8 in April from a revised 110.7 in March. The survey is closely watched because consumer spending accounts for two-thirds of the economy. Still, Wall Street's enthusiasm was selective. Eli Lilly tumbled $2.25 to $66.05 after the drug company backed its second-quarter forecast but lowered its outlook for 2002 and 2003. Retailers also lagged. Wal-Mart fell 34 cents to $55.86, while Home Depot lost 59 cents to $46.37. Analysts said investors remain cautious, and reluctant to extend themselves too much for fear that their investments will lose value. "There are a lot of people out there who are looking for encouragement right now," said Brian Bruce, director of global investments at PanAgora Asset Management. "They believe in the markets and believe they're the right place to be, but they've been burned the last couple of years and they're not willing to go out too far on a limb at this point." Advancing issues led decliners 2 to 1 on the New York Stock Exchange. Volume came to 1.53 billion shares, compared with 1.26 billion at the same point Monday. The Russell 2000 index rose 10.13 to 510.67. Overseas, Japan's Nikkei stock average dropped 0.4 percent. In Europe, Germany's DAX index gained 0.7 percent, Britain's FT-SE 100 rose 0.2 percent, and France's CAC-40 advanced 0.7 percent.

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