Greenspan’s upbeat talk
lights fire under stocks

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By Amy Baldwin
Associated Press

Positive earnings reports and encouraging words about the economy from Fed Chairman Alan Greenspan combined to push stock prices solidly higher today.

Greenspan told Congress he sees signs the recession will soon end, which heartened investors who themselves have been increasingly confident since late last year. The Federal Reserve's chairman helped squelch recent fears that the market has risen too much and too fast.

"He is not commenting on Wall Street being overly optimistic. That is important, because the big question that has faced the market is, will there be a recovery in the economy and in earnings that will validate the rise in stock prices that we have seen?" said Hugh Johnson, chief investment officer for First Albany Corp.

The Dow Jones industrial average was up 65.11, or 0.7 percent, at 9,796.07. The Dow has fallen for most of January as investors worried they'd bought stocks prematurely. On Jan. 4, the Dow achieved its best close since the terror attacks, rising to 10,259.74, up 24.5 percent from its Sept. 21 low of 8,235.81. The Dow is now about 19 percent above that low.

The tech-laden Nasdaq composite index rose 20.20, or 1.1 percent, to 1,942.58, and the Standard & Poor's 500 index gained 3.97, or 0.4 percent, to 1,132.15. The Nasdaq is up 36.5 percent from its Sept. 21 low; the S&P, up 17 percent. Advancers beat decliners nearly 4 to 3 on the New York Stock Exchange, with 1,729 up, 1,374 down and 233 unchanged. Volume totaled 1.49 billion shares, ahead of the 1.44 billion shares traded yesterday.

The NYSE composite index rose 1.30 to 578.92, the American Stock Exchange composite index advanced 3.96 to 834.35 and the Russell 2000 index, the barometer of smaller company stocks, rose 2.28 to 479.73.

The Treasury's 2-year note fell 332 to 100 1132; its yield rose 5 basis points to 3.06 percent. The 10-year note gained 232 to 99 78; its yield fell 1 basis point to 5.02 percent. The 30-year bond rose 632 to 98 2732; its yield fell 1 basis point to 5.46 percent.

The market's upturn also came in response to a string of encouraging earnings reports.

"Earnings reports, particularly from the technology sector, have been generally speaking better than expected," Johnson said.

Johnson added that the S&P 500 companies are on track to beat earnings expectations. Analysts had predicted the S&P 500 would achieved combined earning of $10.32 a share, but raised their projections by 40 cents. But so far, 186 of the S&P 500 companies have reported results, and 112 have surpassed expectation, Johnson said.

Among Wall Street's winners, EMC rose $2.04 to $16.60 after reporting a fourth-quarter loss of 4 cents a share, 3 cents better than analysts were expecting, and said it would be profitable in 2002.

UnitedHealth gained $1.93 to $74.33 after beating earnings estimates by 3 cents a share. Kimberly Clark, which beat estimates by 2 cents a share, advanced 75 cents to $59.20.

Combined with Greenspan's upbeat comments, "this is welcomed news," said Joseph V. Battipaglia, chief investment strategist at Gruntal & Co., adding that the battered tech sector stands to gain the most as signs of an economic recovery become more evident.

"Investors want to believe there will be a tech recovery, and that companies can grow faster than their contraction rates over the last two years. You can start to get a bit enthusiastic," he said.

Among other tech firms, Microsoft rose 92 cents to $64.66, Intel climbed 75 cents to $33.20, and IBM advanced 82 cents to $108.72.

The market also drew strength from the Labor Department's report that new claims for unemployment insurance declined for the third consecutive week, hitting their lowest level in six months. The report suggested the long-anticipated economic rebound is reaching workers. But there were some disappointments today, such as Bristol Myers Squibb, which met fourth-quarter expectations but predicted first-quarter results would be down 10 percent to 15 percent from last year. It fell $2.53 to $46.85.

After the market closed, optical networking equipment maker JDS Uniphase said its losses widened in the second quarter to $2.1 billion, or $1.60 per share, compared with a loss of $895 million, or 93 cents per share, in the same period a year ago. Sales were $286 million, down 69 percent over $925.1 million posted in the year-ago period. Excluding one-time items, JDS Uniphase lost $255.3 million, or 19 cents a share. Analysts were expecting a loss of 2 cents a share that excluded costs associated with restructuring and a deferred tax adjustment.

The results, however, were in line with guidance provided by the company in December.