NEW YORK >> Wall Street investors began the new year cautiously today, putting off buying until the last hour of trading but still giving stocks a respectable advance. Late buying surge lifts stocks
By Amy Baldwin
Associated PressWhile tech stocks traded higher for much of the day, blue chips suffered profit taking following weeks of gains. Part of investors' careful approach came from uncertainty over precisely when in 2002 business conditions will improve, analysts said.
A mixed economic report that said manufacturing activity shrank in December, although not as much as expected, failed to trigger an earlier upturn. Lighter trading volume due to the New Year's holiday also contributed to today's slow start.
"The manufacturing orders were favorable; they did give a bit of a boost to the market. But the market is wrestling with attempts to find a footing after a turbulent year and amid light trading," said Alan Ackerman, executive vice president of Fahnestock & Co.
The Dow Jones industrial average finished up 51.90 at 10,073.40, after falling as much as 85 earlier. The Dow managed to end 2001 above 10,000 despite falling 115 points on Monday. The market was closed yesterday for New Year's.
The broader market was also higher. The Nasdaq composite index rose 28.85 to 1,979.25, and the Standard & Poor's 500 index advanced 6.59 to 1,154.67.
The NYSE composite index gained 0.74 to 590.54, the American Stock Exchange composite index fell 3.86 to 843.75 and the Russell 2000 index fell 1.31 to 487.19.
Decliners edged advancers 16 to 15 on the New York Stock Exchange, with 1,651 up, 1,540 down and 163 unchanged. Volume was 1.17 billion shares.
The Treasury's 2-year note fell 9/32 to 100 -3/32; its yield rose 15 basis points to 3.20 percent. The 10-year note dropped 31/32 to 98 - 25/32; its yield gained 13 basis points to 5.16 percent. The 30-year bond lost 1 - 10/32 to 97 - 9/32; its yield rose 9 basis points to 5.56 percent.
Analysts said the market was pleased to hear the Institute of Supply Management, formerly known as the National Association of Purchasing Management, report its index of business activity rose to 48.2 in December from 44.5 in November. Analysts had been expecting a reading of 46. An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction.
But the report wasn't enough to immediately spur buying on a day when many traders were still on vacation.
Analysts also noted that stock indexes, substantially higher from the lows following the Sept. 11 terrorist attacks, have room to fall back as investors collect profits. The Dow ended 2001 up 21.7 percent over its Sept. 21 low of 8,235.81. The Nasdaq finished last year up 37 percent from its low; the S&P 500, up 18.9 percent.
Analysts also said today's early selling was attributable to investors locking in profits before companies begin issuing first-quarter profit warnings.
"The market is going to be pretty choppy in January with (warnings). There are probably going to be a few unpleasant surprises," said Bill Barker, investment strategy consultant for Dain Rauscher.
AT&T rose 56 cents to $18.70 after Merrill Lynch raised its near-term rating on the stock to "buy" from "neutral."
Merck climbed 96 cents to $59.76, General Electric gained 87 cents to $40.95 and Ford advanced 50 cents to $16.22.
Retailers were weak after having suffered one of the worst holiday sales season in at least a decade. Kmart fell 72 cents to $4.74 after Prudential Securities reduced its rating on the discounter to "sell" from "hold."
The tech sector got a boost from chip makers, which rose on reports of higher prices. South Korea's Hynix Semiconductor, the world's third-largest memory chipmaker, has raised prices for its long-term customers for the third time in a month. Hynix, which also said demand for memory chips have steadily been rising with the introduction of Microsoft's new Windows XP operating system, is in talks with Micron Technology to form an alliance to cope with sagging chip prices.
Micron rose $2.24 to $33.24.
Chip makers also benefited from an upbeat report by the Semiconductor Industry Association. Intel advanced $1.55 to $33.