Investors keep Wall
Street rally going

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By Amy Baldwin
Associated Press

NEW YORK >> Wall Street shook off early losses and extended its rally to a second session today as investors grew more confident about an economic turnaround that has yet to become apparent.

Analysts were encouraged by the upturn because they'd expected a selloff following the market's rally yesterday, when the Dow industrials gained 237 points and the Nasdaq composite index climbed 103. With little positive news about earnings and the economy, investors have limited many buying sprees to one day at a time. Today was the third straight day of gains for the Dow and Nasdaq.

"This is just a darn good follow-through to big gains," said Scott Bleier, chief investment strategist at Prime Charter Ltd.

The Dow Jones industrial average closed today up 60.07 at 10,539.06, after falling as much as 46 in early trading.

The broader market also finished higher. The Nasdaq rose 9.05 to 2,084.79, and the Standard & Poor's 500 advanced 7.54 to 1,215.68.

Advancers outnumbered decliners nearly 3 to 2 on the New York Stock Exchange, with 1,735 up, 1,303 down and 236 unchanged. Volume was 1.10 billion shares vs. 1.38 billion yesterday.

The NYSE composite index rose 3.40 to 616.16, the American Stock Exchange composite index fell 0.77 to 890.93 and the Russell 2000 index, which tracks the performance of smaller company stocks, gained 1.67 to 490.71.

The Treasury's 10-year note rose 2/32 to 9810/32; its yield fell 1 basis point to 5.22 percent. The 30-year bond rose 11/32 to 9614/32; its yield fell 2 basis points to 5.62 percent.

While today's session lacked any noteworthy earnings news, Wall Street had three positive economic reports in its favor today.

The Labor Department said its producer price index, which measures inflation before it reaches the consumer, fell 0.4 percent in June, the first decline since last August.

A second report showed retail sales rose 0.2 percent in June, bumped up by strong sales of new cars. The reading was slightly lower than analysts were expecting.

Meanwhile, the University of Michigan's midmonth report on consumer sentiment for July reportedly showed an increase to 93.7 from 92.6 in June.

As the outlook for the economy improves, analysts expect the market to gradually head higher.

"The market's going to rally when the worst looks like it's over and people get confident that they can buy now and not lose a lot of money," said John Forelli, portfolio manager for the John Hancock Core Value Fund.

Today's positive economic data helped boost consumer cyclical stocks, which tend to move up and down with the economy. Caterpillar climbed 58 cents to $52.48, while Ford rose 34 cents to $25.60.

But the retailing sector was mixed, with sales and earnings reports ruling the direction of certain stocks.

Investors punished Toys "R" Us, sending it down 35 cents to $24.80 after the retailer warned that its second-quarter loss will be larger than expected. Wal-Mart rose $1.05 to $52.90, boosted by its report yesterday that same-store sales rose 6.9 percent, well above analysts' expectations.

The market had to work hard for its gains. Volume was lighter than normal, a sign that investors were trading cautiously.

"They don't want to be faked again," Bleier said, referring to recent rallies that have ended as companies issued worse-than-expected earnings or warned of lower profits in the future.

Overall, the market's gains were spread across an array of sectors, including riskier and safer issues alike. Cisco Systems rose 88 cents to $18.74, while Pfizer advanced 83 cents to $38.43.

With more than 720 companies having issued second-quarter profit warnings, analysts say investors are now more concerned about what businesses have to say about the future.

Chip maker Advanced Micro Devices proved that theory, falling $1.62 to $21.08 today, after announcing yesterday it barely beat Wall Street's dramatically lowered second-quarter earnings. However, it also gave a grim outlook for the current quarter.