Closing Market Report

Star-Bulletin news services

Dow stages
triple-digit rally

By Hope Yen
Associated Press

NEW YORK >> Wall Street displayed its volatile nature again today as investors staged a late-day rally, sending the Dow industrials up more than 260 points.

The market's advance reversed an earlier sell-off as investors remained mindful of an end-of-business-day deadline for companies to certify their financial results. As the session wore on, analysts said investors were feeling more confident in companies' ability to stand by their results.

Technical factors, such as traders trying to make a quick profit once the markets turned up after a two-day downturn, may also have contributed to the buying, analysts said.

"It just seems like the selling ran out of steam. Once it turned higher, you had short-term traders hop in on the long side," said Richard A. Dickson, technical analyst for Hilliard Lyons in Louisville, Ky. "It's just more of the volatility that we have been seeing."

Advancing issues outnumbered decliners more than 9 to 4 on the New York Stock Exchange where volume was relatively light.

The Dow rose 260.92, or 3.08 percent, to 8,743.31. After falling as much as 129 points earlier in the session, the blue chip index more than recovered from yesterday's 207-point loss.

The broader market was also sharply higher. The Nasdaq composite index gained 65.02, or 5.12 percent, to 1,334.30, following Tuesday's loss of 37.52. The Standard & Poor's 500 index rose 35.41, or 4.01 percent, to 919.62, after falling 19.58 points the day before. The Russell 2000 index, which tracks smaller company stocks, rose 11.64, or 3.08 percent, to 389.40.

The price of the Treasury's 10-year note was up 5/32 point today, while its yield fell to 4.10 percent from 4.09 percent late yesterday. Two-year Treasury notes fell 9/32 and their yield was 2.12 percent, up from 1.97 percent yesterday.

Today's late rally is in keeping with sessions in the last few weeks, where investors traded cautiously before staging a burst of momentum buying or selling. Analysts attributed part of the gains to bargain-hunting following yesterday's declines, which were prompted by the Federal Reserve's decision not to lower interest rates.

Investors were also becoming more confident as several companies' chief executives began to certify their financial reports before the Securities and Exchange Commission's deadline, which is the close of business today.

"There is just a certain amount of relief that the signatures were coming in," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray.

Analysts had worried that a delay by many companies could prompt a sell-off by jittery investors. Still, the effects may be muted since the SEC order does not spell out what would happen if companies miss the deadline. Companies also can get an automatic five-day extension.

Wall Street appeared to be little affected by an economic report released today by the Commerce Department showing that businesses increased their inventories in June by $1.1 trillion, or 0.2 percent. The report, which was slightly ahead of analysts' expectations, offered a sign that companies may be more optimistic about the economy's prospects.

Some companies gained despite announcing they would have to restate past earnings, such as Household International, which rose 29 cents to $38.09.

Earnings disappointments pulled down other issues. Vivendi, which posted a big first-half loss and announced it would sell $9.8 billion in assets including U.S. publisher Houghton Mifflin, declined $3.67, or 23.9 percent, to $11.66.

But Applied Materials rose 96 cents to $14.42 despite reporting that third-quarter orders were weaker than anticipated.

Overseas, Japan's Nikkei stock average closed down 0.5 percent. In Europe, France's CAC-40 fell 4.4 percent, Britain's FTSE 100 declined 2.4 percent, and Germany's DAX index fell 2.5 percent.

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