NEW YORK >> Placing some bets despite their worries about the economy, bargain-hunting investors sent the stock market higher today.
Stocks surge in
aftermath of rate cut
The Dow rebounds 102 points
while a late round of buying
pushes the Nasdaq up 28
By Amy Baldwin
Wall Street enjoyed a solid advance by late afternoon after investors spent much of the day pondering what the Federal Reserve's seventh interest rate cut will mean for the economy. Investors had been alternating between worries that the quarter-point cut, which the Fed made yesterday, won't be enough to reinvigorate the economy and relief that the central bank didn't think the economy needed a bigger cut.
The Dow Jones industrial average finished a choppy session up 102.76 at 10,276.90. The Dow recovered most of the 146 points lost yesterday.
"Contrary sentiment was getting overdone," said Steven Goldman, market strategist for Weeden & Co.
The broader market also advanced. The Nasdaq composite index rose 28.71 to 1,860.01, and the Standard & Poor's 500 index gained 8.05 to end at 1,165.31.
Advancing issues outnumbered decliners more than 4 to 3 on the New York Stock Exchange, with 1,847 up, 1,265 down and 208 unchanged. Volume came to 1.10 billion shares vs. 1.02 billion shares yesterday.
The NYSE composite index rose 3.07 to 601.77, the American Stock Exchange composite index gained 0.91 to 884.92 and the Russell 2000 index, the barometer of smaller company stocks, rose 4.94 to 477.18.
The Treasury's 10-year fell 932 to 100 2532; its yield rose 4 basis points to 4.9 percent. The 30-year bond fell 232 to 99 332; its yield rose 1 basis point to 5.44 percent.
However, buyers likely were prompted by cheaper prices from yesterday's selloff rather than optimism about an economic turnaround in the near future, analysts said.
The Fed did not predict business would soon improve, prompting investors to sell stocks across sectors yesterday.
And analysts also don't expect any gains to be long lasting until companies can say business is improving.
"There was a lot of hope that the Fed would say they are about done easing (rates), because the economy is showing strength. But they basically said we continue to see weakness," said Richard A. Dickson, a technical analyst at Hilliard Lyons in Louisville, Ky.
"We are looking for some indication that the economy has bottomed out."
Among the gainers were companies that indicated business was getting better.
Dow industrial General Motors climbed $1.50 to $57.20 after affirming its third-quarter earnings outlook.
The tech sector got a boost from semiconductor equipment makers, which reported $764 million in orders in July and a book-to-bill ratio of 0.67, meaning $67 of orders were received for every $100 of product shipped. July's results were stronger than Wall Street expected.
Triquint Semiconductor rose $2.92 to $22.32, and Applied Materials advanced $1.89 to $43.90.
Meanwhile, companies that acknowledged business continues to suffer were weak.
AOL Time Warner fell 40 cents to $39.50 after announcing it is cutting 1,700 jobs as it deals with a slumping advertising market.
J.C. Penney fell $1.33 to $25.05 after affirming its earnings estimates for the third quarter and the year.
At the low end of its ranges, Penney would miss analysts' expectations.
Stocks overseas, which also have suffered from economic slowdowns and weak consumer demand, were mixed today in response to yesterday's slide in New York.
Japan's Nikkei stock average finished the day up 1.0 percent. In Europe, France's CAC-40 fell 0.5 percent, Britain's FT-SE 100 slipped 0.4 percent, and Germany's DAX index inched up 0.1 percent.
Elsewhere, the International Monetary Fund agreed to offer Argentina an additional $8 billion in loans, which will bring to $22 billion the amount of IMF help available to help the country weather a severe economic crisis.
The new money comes with a series of conditions that the United States demanded be included in an effort to make sure the economic rescue package had a better chance of healing South America's second-largest economy.
Argentina's problems have reverberated through financial markets in Brazil and other countries in the region. Fears have been aroused of a repeat of the Asian crisis, in which troubles that began in Thailand pushed 40 percent of the globe into recession as investors rushed to take money out of volatile, emerging markets.
However, the initial market response to the new IMF loans was strongly positive today with Argentine stocks soaring in value in early trading.
The agreement on the new package was announced late last night by IMF Managing Director Horst Koehler after 12 days of talks with an economic team from Argentina.
Treasury Secretary Paul O'Neill, who has criticized the massive IMF bailout packages assembled during the Clinton administration to deal with the Asian crisis, hailed the new accord.
"This is an important step as we continue to work toward a sustainable long-term solution to Argentina's economic problems," O'Neill said in a statement.
He said a portion of the new IMF loans would be dedicated to helping Argentina restructure its $130 billion foreign debt burden.