NEW YORK >> Stock prices fluctuated but nonetheless showed signs of stability today as investors looked for bargains after last week's precipitous drop. Stocks rise despite
falling consumer confidenceThe economic gauge sinks to a
5-year low but the Dow and Nasdaq
stabilize amid intraday volatilityBy Lisa Singhania
Associated PressThe major indexes closed modestly higher, having withstood several waves of profit-taking from yesterday's big rally. Analysts were generally pleased with Wall Street's performance and noted that just holding steady is good news, given stocks' recent volatility.
"It's very important that we stabilize. You had a big day Monday after a complete sellout the week before. I'd be very happy to see the market go sideways for a couple of weeks to regain its breath," said Will Braman, chief investment officer for John Hancock Funds.
The Dow Jones industrial average rose 56.11 to 8,659.97, bringing its two-day advance to more than 424 points. The blue-chip index plunged 1,369 points last week.
Broader indicators also advanced for a second session. The Nasdaq composite index rose 2.24 to 1,501.64, while the Standard & Poor's 500 index rose 8.82 to 1,012.27.
Advancing issues led decliners nearly 3 to 2 on the New York Stock Exchange, with 1,886 up, 1,286 down and 176 unchanged. Volume came to a heavy 1.58 billion shares, compared with 1.73 billion yesterday.
The NYSE composite index rose 4.57 to 525.99, the American Stock Exchange composite index slipped 0.20 to 780.46 and the Russell 2000 index was up 2.39 at 396.18.
The market calmly digested a Conference Board report showing consumer confidence this month at its lowest level since January 1996, falling to 97.6 from 114 in August. The numbers are closely watched because consumer spending accounts for two-thirds of the economy.
Analysts hesitated to attribute much to the market's reaction to the data, saying the results weren't surprising in view of the Sept. 11 terrorist attacks and already weak economy. They said the bigger concern for the market is still corporate profits, which show few signs of improving and which are expected to be further hurt by fallout from the attacks. The figure is based on data collected both before and after Sept. 11, when hijackers crashed commercial planes into the World Trade Center and the Pentagon.
The Conference Board said in a statement that "while survey results conducted before and after the terrorist attacks on September 11 differed slightly, there was no reversal in the downward trend of the index."
Mark Zandi, the chief economist at Economy.com, questioned that interpretation.
"When all is said and done, I'm sure the attack going to be shown undermining confidence," Zandi said. "A bunker mentality is descending on consumers and investors -- everyone is battening down the hatches."
The slide in consumer confidence, the largest monthly point drop since October 1990, when it fell 23.0 points, throws even more support behind many economists' predictions that the attacks would tip the already battered U.S. economy into a recession.
The index, based on a monthly survey of some 5,000 U.S. households,compares results to its base year, 1985, when it stood at 100.
"The economy faces tougher times ahead," said Lynn Franco, director of the Conference Board's Consumer Research Center. "While consumers have managed to keep the U.S. out of a recession for several years now, that soon may no longer be the case."
Meanwhile, companies continue to announce job cuts that are not necessarily connected to the attacks. Honeywell rose 41 cents to $28.25 after saying the number of jobs it is eliminating in 2001 will total 15,800. It previously estimated 12,000.
One of the biggest losers in the Dow was General Motors, which fell $1.87 to $41.36, a 4.3 percent loss, on apparent profit-taking from yesterday's rally.
Among today's gainers, AOL Time Warner rose 30 cents to $32.80 despite warning late yesterday it now expects slower growth in earnings and revenues this year because of a slump in advertising, which was worsened by the terrorist attacks.
Other advancers today included the large, blue-chip stocks that investors tend to gravitate toward when the economy is murky.
Wal-Mart rose $1.12 to $48.80 on an upgrade from UBS Warburg, while the consumer goods company Procter & Gamble gained $1.54 to $71.
"We're still seeing buying and that's a step in the right direction," said Bryan Piskorowski, market commentator at Prudential Securities. "This has been a constructive session."
Also today, the National Association of Realtors reported sales of previously owned homes jumped to a record level in August, but have slowed in the wake of the terrorist attacks two weeks ago. Strong demand for homes has helped support the sagging economy, and the data appeared to bring into question how long that support would last.
"Right now, the consumer doesn't have a lot to look forward to," said Bill Barker, investment consultant at Dain Rauscher. "There will likely be more layoffs and certainly a weaker stock market and a stalling in house prices and price appreciation."
In other corporate developments, Gateway, the second- biggest direct seller of personal computers, said it will drop Advanced Micro Devices as a chip supplier within two months and buy all of its microprocessors from Intel Corp.
Gateway wants to lower costs by simplifying its manufacturing process and is seeking to improve product reliability and customer satisfaction, said Lisa Emard, spokeswoman for the San Diego-based company. AMD chips are in one of Gateway's six lines of PCs, she said.
Gateway has cut jobs and pulled out of international markets amid a slowdown in personal-computer sales that began late last year. Shares of Gateway fell 19 cents to $5.98 and have fallen 89 percent in the past year. Advanced Micro shares fell 60 cents, or 6 percent, to $9.21 and have declined 64 percent in the past year.
Overseas, Japan's Nikkei stock average rose 1.5 percent. European stocks were mixed. Germany's DAX index dropped 0.7 percent, while Britain's FT-SE 100 and France's CAC-40 each gained 1.1 percent.