Dow hits high on relief over earnings


POSTED: Friday, March 27, 2009

NEW YORK » This time, it was the consumer who had Wall Street rallying.

Better-than-expected earnings from big consumer brands such as Best Buy and ConAgra Foods Inc. sent the Dow Jones industrial average up 174 points yesterday to its highest level in six weeks. It has surged 21 percent since hitting a nearly 12-year low on March 9. And the technology-dominated Nasdaq composite index is now up 0.63 percent for 2009.

Nearly every day over the past three weeks has seemed to bring morsels of good news - first from the stricken banking sector and then in the form of stronger-than-expected economic data. But Thursday, solid reports from companies selling to the consumer came as a relief to investors anxious about first-quarter earnings, which start pouring in next month.

The advance technically put the Dow in bull market territory; a bull market is defined as a 20 percent rise from a low point.

But with the end of the first quarter quickly approaching, money managers are fearful of missing out on the recent rally, the magnitude of which usually occurs over the course of many years.

David Waddell, senior investment strategist and chief executive of Waddell & Associates, said he has seen some “;seller's remorse”; among his clients who sold stocks too low in the first two months of the year. That can move people back into buying mode.

The Dow jumped 174.75, or 2.3 percent, at 7,924.56, its highest close since Feb. 12. It remains down 9.7 percent for the year, however, and down 44 percent from its record close of 14,164.53 in October 2007.

Broader stock indicators also gained. The Standard & Poor's 500 index rose 18.98, or 2.3 percent, to 832.86, and the Nasdaq rose 58.05, or 3.8 percent, to 1,587.00.

The Russell 2000 index of smaller companies rose 18.78, or 4.4 percent, to 445.30.

The dollar rose against other major currencies. Gold prices rose modestly.

Oil reached a new high for the year, settling up $1.58 at $54.34 a barrel on the New York Mercantile Exchange.

Best Buy said its fiscal fourth-quarter earnings fell 23 percent. Results beat analysts' estimates as the world's largest consumer electronics retailer opened more stores, helping to boost sales. Best Buy rose $4.21, or 12.6 percent, to $37.67.

ConAgra posted results that topped Wall Street's expectations. The company also stood by its earnings forecast for the year. ConAgra shares rose $1.43, or 9.2 percent, to $16.99.