Stocks move higher as investors hunt bargains
NEW YORK » Wall Street bounded higher yesterday as investors still mindful of widening credit problems nonetheless went in search of bargain stocks.
The Dow Jones industrial average rose 117 points, with soaring oil and precious metals prices driving up the companies that produce those commodities.
Investors remain haunted by the big debt problems at banks, notably Citigroup Inc. and Merrill Lynch & Co. But companies outside of the banking, lending and housing industries have been posting strong financial results -- on today, Tenet Healthcare Corp., Nortel Networks Corp. and Archer Daniels Midland Co. impressed Wall Street with their quarterly earnings.
And with no major bad news to follow up Citigroup's Sunday announcement that it was preparing to mark down another $8 to $11 billion of subprime debt, even bank stocks, pummeled in recent months, looked like bargains.
Citigroup fell, but JPMorgan Chase & Co., Bank of America Corp., Wachovia Corp., Wells Fargo and Washington Mutual Inc. -- which all hit 52-week lows Monday -- each jumped yesterday.
"There was an absence of bad news," said Jim Herrick, manager of equity trading at Baird & Co. "But there's room for another shoe to drop. I don't think we're out of the woods yet. It's a classic relief rally."
The Dow Jones industrial average rose 117.54 or 0.87 percent, to 13,660.94.
The size of the gain masked the nervousness in the market; stocks were down earlier in the session.
Broader stock indicators also turned higher.
The Standard & Poor's 500 index rose 18.10, or 1.20 percent, to 1,520.27, and the Nasdaq composite index rose 30.00, or 1.07 percent, to 2,825.18.
The Russell 2000 index of smaller companies rose 11.34, or 1.43 percent, to 801.77.
Advancing issues outnumbered decliners by about 7 to 4 on the New York Stock Exchange, where volume came to $1.50 billion shares.
Government bonds dipped as money flowed back into stocks. The yield on the 10-year Treasury note, which moves opposite the price, rose to 4.37 percent from 4.34 percent late Monday.
The dollar reached yet another record low against the euro. The 13-nation currency rose to a high of $1.4569 before pulling back slightly.
Crude oil on the New York Mercantile Exchange briefly passed $97 a barrel for the first time, before settling up $2.72 at a record $96.70.
Gold on the Nymex rose to another 27-year high.
Tenet Healthcare reported its third-quarter loss narrowed on higher charges and more admissions in commercial managed care. Tenet rose 72 cents, or 22.3 percent, to $3.95.
Nortel Networks said it swung to a profit in the third quarter despite lower revenue. The Canadian telecom equipment supplier reported its best operating margin since 2004. Nortel rose $2.90, or 17.8 percent, to $19.18.
Agricultural processor Archer Daniels Midland said its fiscal first-quarter profit rose 9 percent as improved results at its oilseeds processing business offset higher corn prices. ADM rose $2.37, or 6.9 percent, to $36.89.