NEW YORK >> Wall Street turned more positive today, with stocks rising sharply after an upbeat assessment of the economy. The Dow Jones industrials rose more than 140 points, but analysts cautioned that technical factors played a large part in the advance.
on economic news
rather than a sustainable shift,
are credited for advances
By Amy Baldwin
Investors also remained highly susceptible to any hints of corporate accounting problems, and the market wobbled earlier on rumors -- later denied -- about General Motors' books.
Talk that GM would become the latest company to reveal bookkeeping irregularities forced stocks to give up a respectable early advance. But "once those rumors were dispelled the market was able to put in a bottom midsession and rally back," said Bryan Piskorowski, market commentator for Prudential Securities.
The market's response to the rumors shows how nervous it is after WorldCom announced late Tuesday it had improperly classified $3.8 billion in expenses.
Advancing issues outpaced decliners nearly 3 to 2 on the New York Stock Exchange on heavy volume. The Dow closed up 149.81, or 1.6 percent, at 9,269.92. The Dow fell as much as 200 points yesterday and traded below 9,000 for the first time since October, but closed with a slim loss of 6.71.
The market's broader indicators also gained ground, and were well ahead of the post-Sept. 11 lows they fluctuated around yesterday. The Nasdaq composite index rose 29.87, or 2.1 percent, to 1,459.20, above its post-attack low of 1,423.19.
The Standard & Poor's 500 index climbed 17.11, or 1.8 percent, to 990.64, above its post-attack low of 965.80. The Russell 2000 index, which tracks smaller company stocks, rose 5.75, or 1.3 percent, to 458.75.
The price of the Treasury's 10-year note lost 9/16 point today, while its yield rose to 4.82 percent from 4.74 percent late yesterday. Two-year Treasury notes gave up 3/32 point and yielded 2.80 percent, down from 2.76 percent yesterday.
Piskorowski cautioned against reading too much into the advance, which like yesterday's late-day recovery was due to technical factors including window dressing, the end-of-quarter practice in which institutional investors buy shares to make their portfolios look more impressive in reports to shareholders.
"You can call it a rally. Whether or not it is a sustainable rally is the question," Piskorowski said. "The crisis in confidence continues."
Another factor in today's session was program buying, in which big investors put in orders for large blocks of stocks once the issues fall to certain levels.
Bargain hunting also played a role. Wall Street was due for some gains, having suffered through six weeks of heavy selling on fears about more terrorism and concern about earnings growth and the accuracy of corporate financial reports.
Still, analysts were encouraged by stocks' ability to advance in the wake of WorldCom's disclosure that it hid $3.8 billion in expenses. After a string of scandals -- including those at Enron, Tyco, and ImClone -- analysts believe investors might have accounted for the possibility of more accounting fiascoes.
"The downside potential is less, because it is no longer the big surprise it was," said Scott Bleier, president of Hybridinvestors.com.
Analysts expect investors to shift more of their attention to the economy, which is showing signs of strengthening.
"As we go along the economic news will be more and more positive, and will give the market a catalyst to get it going again," said Susan L. Malley, chief investment officer at Malley Associates Capital Management in New York.
Stocks got some lift from the Commerce Department's report that the economy as measured by the gross domestic product grew at an annual rate of 6.1 percent in the first quarter. That pace of growth was ahead of the government's previous estimates of 5.8 percent and 5.6 percent.
While economic data has been turning more positive throughout the year, analysts say the market's recovery is still going to be rocky. Many say stocks are still overpriced and that investors need time to recover their confidence.
"The fact is the economy is OK, and that is a good underpinning," for the market, Bleier said. "But it has been painful, and we are not going back to the heady years. There is still a tremendous amount of pessimism and bearishness."
Overseas, Japan's Nikkei stock average finished up 1.9 percent. In Europe, France's CAC-40 rose 1.1 percent, Britain's FTSE 100 inched up 0.2 percent, and Germany's DAX index climbed 3.9 percent.