Fed outlook keeps
stocks moving higher

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By Amy Baldwin
Associated Press

WASHINGTON -- Wall Street gained momentum today, surging higher for the second straight day on the Federal Reserve's positive outlook for the economy. The Dow Jones industrials rose by triple digits, bringing its two-day advance to more than 300 points.

Investors are feeling more confident that business is poised to turn around following the Fed's statement yesterday that the economy is strengthening. Better-than-expected earnings from Procter & Gamble added to the gains, while an analyst upgrade of Intel helped technology stocks.

Still, there were some signs of lingering caution, including some early selling in the tech sector.

The Dow Jones industrial average closed up 157.14 at 9,920.00, exceeding yesterday's 144.62-point climb. The biggest contributor to the Dow's gain was P&G.

The Nasdaq composite index rose 20.62 to 1,934.06 following yesterday's 20-point win. The Standard & Poor's 500 index advanced 16.63 to 1,130.20 after gaining 12 points yesterday.

Advancers outnumbered decliners nearly 2 to 1 on the New York Stock Exchange, with 2,089 up, 1,007 down and 244 unchanged. Volume was 1.52 billion shares vs. 1.97 billion yesterday.

The New York Stock Exchange composite index rose 7.96 to 578.50, the American Stock Exchange composite index gained 7.44 to 842.41 and the Russell 2000 index rose 3.38 to 483.10.

The Treasury's 2-year note fell 332 to 99 2332; its yield gained 6 basis points to 3.15 percent. The 10-year note lost 532 to 99 34; its yield gained 2 basis points to 5.03 percent. The 30-year bond rose 132 to 99 632; its yield stayed unchanged at 5.43 percent.

Analysts credited much of the two-day winning streak to long-awaited signs that the economy is recovering. Besides the Fed, investors were encouraged by news yesterday that the economy grew at a 0.2 percent annual rate in the fourth quarter. That increase could signal that the recession ended late last year or early in 2002.

Today also produced good economic news as the Labor Department reported that Americans' incomes increased a solid 0.4 percent in December, after flatlining the month before.

"What we have seen this week is that we have turned the corner. We have left the recession behind," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.

Procter & Gamble soared $3.39 to $81.68 after surpassing quarterly earnings expectations by a penny a share and reaffirming its projections for fiscal 2002. The maker of Crest and Tide, which also posted its first sales increase in a year, was the strongest Dow stock.

Another consumer products maker, Kraft Foods, climbed $1.56 to $37.06 after yesterday raising its 2002 earnings projections beyond analysts' expectations.

Other blue-chip gainers included Home Depot, up $1.02 at $50.09, and J.P. Morgan Chase, which rose 99 cents to $34.05.

Chip maker Intel, also a Dow industrial, gave the tech sector some lift, rising $1.18 to $35.04 after its shares were upgraded by Merrill Lynch.

Other tech advancers were IBM, up $2.34 at $107.89, and Oracle, which gained 64 cents to $17.26 on an upgrade from Prudential Securities.

Also in tech trading, shares of Hewlett-Packard and Compaq Computer posted moderate gains following clearance of their $23.6 million merger from the European Union. HP inched up 15 cents to $22.11, while Compaq rose 36 cents to $12.35.

Analysts said bargain hunting also factored into today's advance as buyers took advantage of cheaper prices following a big selloff Tuesday, when the Dow tumbled 247.51, its biggest one-day point drop in three month. Worries about companies' accounting procedures, precipitated by the collapse of Enron, were cited as the biggest factor in that drop.

"I continue to believe that we are in a major recovery from late September lows. ... We have had a setback because of the Enron situation. Everyone got a bit frightened," said Al Mirman, strategist at V Finance in Sarasota, Fla.

After the market closed, Walt Disney Co. said its fiscal first-quarter earnings fell 18 percent as advertising sales dropped at the company's ABC television network and fewer visitors came to its U.S. theme parks.

Net income, which exceeded analysts' forecasts, fell to $433 million, or 21 cents a share, in the quarter ending Dec. 31 from profit from operations of $529 million, or 25 cents, a year earlier.

In Japan, the Nikkei stock average finished up 0.8 percent.