NEW YORK >> Wall Street managed a sharp snapback today, rising despite allegations of insider trading at ImClone and more profit warnings. But while the Dow Jones industrials rose 100 points, analysts attributed much of the buying to technical factors, not a turnaround in investor sentiment.
Stocks end higher after
By Amy Baldwin
A cautious mood dominated the session following a big selloff yesterday. New charges of unethical business practices -- this time, the arrest of former ImClone chairman and CEO Sam Waksal on insider trading charges -- added to the market's ongoing uneasiness, as did a string of profit warnings from such companies as Safeway and Monsanto.
"The market's a mess," said Charles White, portfolio manager at Avatar Associates. "All of this is not conducive to rebuilding any normalcy or confidence in the market."
Despite the late-day rally, declining issues narrowly outnumbered advancers 16 to 15 on the New York Stock Exchange. Volume was heavy at 1.72 billion shares, compared with 1.39 yesterday.
The Dow Jones industrial average closed up 100.45, or 1.1 percent, at 9,617.71. Yesterday, the Dow fell 128.14 to its lowest close since Nov. 5, when it stood at 9,441.03.
Broader indicators also finished higher. The Nasdaq composite index rose 21.94, or 1.5 percent, to 1,519.12, having dropped 33.51 yesterday to its lowest close since Oct. 2. The Russell 2000 index inched up 0.21 to 462.99, following yesterday's loss of 6.51.
The Standard & Poor's 500 index advanced 6.66, or 0.7 percent, to 1,020.26 following yesterday's loss of 17.14, which had brought the index to its lowest close since Sept. 26.
But analysts said the gains were meaningless and attributed them to a practice commonly called short covering. When short covering occurs, investors are forced to buy stock to replace shares that they earlier borrowed and sold on the expectation that the market would fall further.
"People are buying back to get even," said Bryan Piskorowski, market commentator at Prudential Securities. "This is no brave new world. One day of short covering in June is not the silver bullet for the market."
The price of the Treasury's 10-year note was up 5/32 point today, while its yield fell to 4.95 percent from 4.98 percent late yesterday. Two-year Treasury notes were unchanged with a yield of 3.04 percent.
Worries about business ethics, along with disappointing earnings and outlooks have pressured Wall Street for weeks, sending the major indexes near the Sept. 21 lows that followed the terrorist attacks.
Overseas, markets were sharply lower with Japan's Nikkei finishing down 1.1 percent. In Europe, France's CAC-40 dropped 2.6 percent, Britain's FTSE 100 tumbled 1.7 percent, and Germany's DAX index lost 2.1 percent.