The Dow industrials
gains 230 points after three
triple-digit losses in a row

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By Lisa Singhania
Associated Press

NEW YORK >> A wave of bargain hunting revived stocks today, sending the Dow Jones industrials up 230 points as investors sought to capitalize on three sessions of sharp losses.

Still, the advance was fragile and much of its momentum faded late in the day. Analysts weren't surprised, noting that investors are still skeptical about market conditions,

"After a handful of days of selling off, we were probably due for a little bit of bounce. But this is nothing that you want to start pounding the table and shouting that the new bull market has begun," said Charles White, portfolio manager at Avatar Associates.

The Dow closed up 230.46, or 2.9 percent, at 8,274.09 after rising as much as 374 earlier in the session. It was the average's first triple-digit gain in more than a week and followed a three-day, 692-point losing streak.

Advancing issues led decliners nearly 3 to 1 on the New York Stock Exchange. Volume was heavy.

The market's broader stock indicators also closed higher, despite some pullback late in the session. The Standard & Poor's 500 index climbed 24.97, or 3.0 percent, to 859.57, and the Nasdaq composite index rose 53.44, or 4.4 percent, to 1,259.45. The Russell 2000 index, the barometer of smaller company stocks, rose 13.65, or 3.7 percent, to 380.77.

The price of the Treasury's 10-year note was down a point today, while its yield rose to 4.33 percent from 4.21 percent late yesterday. Two-year Treasury notes were down 5/16 point and yielded 2.05 percent, up from 1.89 percent yesterday.

Some buying was to be expected following the market's big losses over the past few sessions, but the extent of today's surge caught many by surprise. Still, it wasn't clear whether the gains represented a true rally or just a rebound. In the past two years, Wall Street has repeatedly rallied only to pull back on later selling. The Dow rose 1,009 points in late July, only to give back roughly two-thirds of that by the end of trading yesterday.

Cisco rose 71 cents to $12.07 ahead of an earnings report that came out after the market's close. The stock had dropped sharply yesterday because of anxiety that the results might be disappointing.

Bu the company posted stronger-than-expected profits of $772 million, or 10 cents per share, compared with a profit of $7 million, or break-even on a per-share basis, in the same period a year ago.

Excluding special items, the company earned $1 billion, or 14 cents a share, compared with $163 million, or 2 cents per share, last year.

Analysts were expecting Cisco to post a profit of 12 cents per share on sales of $4.9 billion, according to a survey by Thomson First Call.

Other tech stocks also fared well, including Advanced Micro Devices, which rose 75 cents to $8.32, and Oracle, which gained 32 cents to $9.33.

Financial stocks, which had pulled back on concerns about the banking industry and financial crises overseas, also rebounded. J.P. Morgan rose $1.30 to $23.65, while Citigroup advanced $1.75 to $30.40.

Investors were selective with their enthusiasm, however.

AOL Time Warner fell 5 cents to $9.90 on news that it had named former cable TV executive Jonathan Miller as head of its America Online division. The division has come under scrutiny amid its falling stock price and questions about its accounting practices.

Today's upturn cut short a three-session decline on the market that had sent the Dow briefly back below its lowest post-terrorist attack of 8,235.81 and the Nasdaq to a new five-year low.

Analysts welcomed the advance, but were hesitant to read much into it — noting that nothing fundamental has changed from the conditions that provoked the most recent declines. Economic data suggesting that business is slowing have yet to be disproved, and most companies' forecasts for the future are cautious.

They also note Wall Street has a history of rallying but being unable to sustain the gains. The volatility has been especially intense this summer, alternating between sharp declines and advances.

Retail sales figures due out tomorrow could provide a catalyst for buying if the results are stronger than expected. Wall Street is also hoping that the Federal Reserve will decide to further lower interest rates at its next meeting. But in the meantime, the fluctuations will likely continue.

"The market is going to have to prove to investors that it can hold onto a gain for some time before you're going to have a lot of believers," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "I'm not sure I'm a believer myself, at least in this bounce."

Overseas, Japan's Nikkei stock average fell 2.1 percent. In Europe, Germany's DAX index climbed 7.1 percent, Britain's FTSE 100 rose 3.4 percent and France's CAC-40 advanced 5.4 percent.