Dow soars again

Confident investors are ready
to buy again, analysts say

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By Amy Baldwin
Associated Press

NEW YORK >> Galvanized by hopes that the market's worst days are over, investors bought stocks enthusiastically today, sending the Dow Jones industrials surging more than 400 points for the second time in four sessions.

The Dow also had its third-largest one-day point gain.

The stunning advance, which saw the Nasdaq composite index rise more than 70 points, followed the market's first really upbeat week in more than two months. Analysts believe investors, becoming more comfortable about earnings and less worried about corporate bookkeeping, are ready to buy again.

Prices depressed by 10 weeks of selling have also been a big draw.

"Investors are just realizing that the market looks pretty cheap today," said John C. Forelli, portfolio manager for Independence Investment LLC in Boston.

Advancing issues outnumbered decliners more than 4 to 1 on the New York Stock Exchange. Volume was moderate. The Dow closed at its high of the session, up 447.49, or 5.4 percent, at 8,711.88, according to preliminary calculations. That followed Wednesday's 488.95-point win; it was also the third-highest one-day advance, after the 499.19-point gain of March 16, 2000. Last week, the Dow gained 3.1 percent, its best weekly advance since the week that ended May 17.

The broader market was also higher. The Nasdaq composite index rose 73.13, or 5.8 percent, to 1,335.25, having gained 27 on Friday. The Standard & Poor's 500 index advanced 46.12, or 5.4 percent, to 898.96, following Friday's 14-point gain. The Russell 2000 index, the barometer of smaller company stocks, rose 18.55, or 4.9 percent, to 400.81. It was the Russell's first close above 400 since July 17 when it stood at 409.69.

The Treasury's 10-year note was down 1 15/32 point today, while its yield rose to 4.57 percent from 4.38 percent late Friday. Two-year Treasury notes were down 3/8 point and yielded 2.41 percent, up from 2.22 percent late Friday.

Analysts were encouraged by the market's ability to shake off the latest report of accounting problems, this time at Qwest Communications, which said it was restating results for 2000 and 2001. Qwest, which also withdrew its 2002 financial forecast, slipped 1 cent to $1.49 but didn't impede the market's upward progress.

"The market shrugged off Qwest. Information like that should be priced into the market. ... But the credibility building is going to be a long and slow process. We are not looking at a rapid rebound like this every day," Forelli said.

Some market observers said they were concerned the market was going from cheap to pricey too quickly.

"You have to be pretty quick to take your gains, and not assume the market is going to go straight up," said Susan L. Malley, chief investment officer for Malley Associates Capital Management.

Today's gains were seen across most market sectors, in keeping with how widespread the recent sell-off had been.

IBM climbed $4.78 to $71.18, General Motors advanced $3.04 to $46.09, and Citigroup rose $2.57 to $33.31.

Cardinal Health rose $4.65 to $57.15 after Credit Suisse First Boston upgraded it to "strong buy" from "buy."

Retailers were also among today's winners with Williams-Sonoma rising $2.64 to $26.20. Tommy Hilfiger advanced $1.07 to $13.29 on fiscal first-quarter earnings that were 3 cents higher than expectations.

Analysts say investors feel more comfortable about buying stocks after pummeling prices over the past 10 weeks. But analysts caution that the market will have a difficult time holding its gains until earnings outlooks improve and accounting becomes more dependable.

"It has been a trading market, and it will probably still be a trading market. It won't be straight up," Malley said. "We're still going to have lots of bumps."

DOW, WOW! The Dow Jones industrial average recorded its third-biggest point gain in history today. Here are the 10 best point days for the Dow: Points Date 499.19 March 16, 2000 488.95 July 24, 2002 447.49 Today 402.63 April 5, 2001 399.10 April 18, 2001 380.53 Sept. 8, 1998 368.05 Sept. 24, 2001 342.95 May 16, 2001 338.62 Dec. 5, 2000 337.17 Oct. 28, 1997