Stocks advance after
two days of selling

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By Amy Baldwin
Associated Press

NEW YORK >> Stocks fluctuated throughout an uncertain session today, dropping amid fears of terrorist attacks and then turning mostly higher late in the day on rumors that Osama bin Laden had been captured.

The market, worried about the possibility of more terrorism, was on its way to its third straight decline before the unconfirmed rumors.

"There were some rumblings that the U.S. military may have captured bin Laden. That caused some buying late in the day," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "When you have volume so light, it's not hard for the market to move."

Trading was light, at 1.14 billion shares, compared with 1.17 billion on yesterday, amid the uneasiness over warnings from the FBI and Vice President Dick Cheney each of the past three days. Advancing issues were barely ahead of decliners on the New York Stock Exchange.

The Dow Jones industrial average closed up 52.17, or 0.5 percent, at 10,157.88, according to preliminary calculations. Still, the advance was moderate compared with the Dow's 247-point loss over the previous two sessions.

The broader market also managed a late advance, with the exception of the Russell 2000 index, which fell 1.55, or 0.3 percent, to 493.91. But the Nasdaq composite index rose 9.27, or 0.6 percent, to 1,673.45, having dropped 77.21 Monday and Tuesday. The Standard & Poor's 500 index gained 6.14, or 0.6 percent, to 1,086.02.

The price of the Treasury's 10-year note was up 7/32 point today, while its yield fell to 5.12 percent from 5.15 percent late yesterday. Two-year Treasury notes were up 1/16 point to 100 11/32 and yielded 3.19 percent, down from 3.29 percent late yesterday.

Today marked the market's first winning day in three sessions, but it was mild compared to the big swings the market enjoyed last week when the Nasdaq gained 8.8 percent for the week and the Dow rose 4.2 percent.

Still, analysts weren't holding much hope that the market would make much, if any, upward progress by the end of this week and believed selling could continue to dominate as investors play it safe ahead of the long Memorial Day weekend. Some of the recent terror warnings are pegged to the weekend.

"Emotions are running high. It's a reminder of the disruption that a terrorist strike can cause not only to the public, in loss of life, but its effects on the economy," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.

Hyman said the prospect of terrorism is "a reminder of the risk profile that we as investors have to put into a market ... that is not cheap and still has nagging earnings concerns."

Among the gainers, Ford, advanced 52 cents to $18.10 after Banc of America raised its rating to buy" from "market perform."

Johnson & Johnson rose $1.01 to $61.65 after releasing data showing that its new drug-coated stent is effective. Additionally Merrill Lynch reiterated its "strong buy" rating on the Dow stock.

Grocery chain Albertson's advanced $1.91 to $34.06 after raising its first-quarter outlook.

Dell Computer gained 12 cents to $27 as Merrill Lynch reiterated its "strong buy" rating on the stock.

WorldCom Inc. shares rose more than 16 percent today in the wake of the telecommunications company's announcement that it is eliminating its MCI tracking stock.

The company announced the recombination of the WorldCom and MCI issues after the stock market closed yesterday. The move was widely expected by analysts as management searches for ways to cut costs and position itself to repay $30 billion in long-term debt.

On the Nasdaq, WorldCom shares rose 23 cents a share, to close at $1.65.

Gap, however, dropped $2.45, or 15.3 percent, to $13.55, after president Millard "Mickey" Drexler yesterday announced plans to retire as CEO, a move that raised new questions about the future of the troubled retailer. Additionally, Merrill Lynch lowered its near-term rating on Gap shares to "neutral" from "strong buy."

Dow industrial Home Depot fell 65 cents to $44.25, after beating earnings expectations on yesterday but indicating it is cautious about the future of the home improvement industry.

Overseas, Japan's Nikkei stock average finished Wednesday up 1.4 percent. In Europe, France's CAC-40 sank 1.7 percent, Britain's FTSE 100 fell 0.9 percent, and Germany's DAX index declined 1.3 percent.