NEW YORK >> Stocks managed to post a third straight day of gains today in tepid trading following last week's big market rally and a weekend bomb attack in Indonesia. Stocks rise modestly
on cautious trading
By Hope Yen
Associated PressAnalysts said many investors were waiting to see whether the market could continue its upward surge before jumping back into stocks. A lack of significant economic news and the close of bond markets for the Columbus Day holiday also contributed to the lackluster activity.
"People are trying to decide whether to take profits," said Brian G. Belski, fundamental market strategist at US Bancorp Piper Jaffray. "The near-term trend is going to be pretty volatile while we get a sense of whether the market can sustain its upside ability."
Declining issues were even with advancers on the New York Stock Exchange. Volume was light. The Dow Jones industrial average rose 27.11, or 0.4 percent, to close at 7,877.40, after gaining 4.3 percent last week to snap a six-week losing streak. Earlier in the day, blue-chip stocks dropped as much as 105 points.
The broader market also finished higher. The Nasdaq composite index rose 10.06, or 0.8 percent, to 1,220.53, having surged 6.2 percent last week. The Standard & Poor's 500 index gained 6.12, or 0.7 percent, to 841.44, following a weekly advance of 4.3 percent. The Russell 2000 index, a barometer of smaller company stocks, rose 1.60, or 0.5 percent, to 346.53.
Last week's rally boosted the Dow 564 points in two days and followed six weeks of market declines that pushed the Dow to a five-year low and the Nasdaq to a six-year low. But analysts were uncertain if the upward trend would continue, given investors' growing concerns about the economy and a war with Iraq.
Terrorism concerns also weighed on investors, after a massive bomb attack killed more than 180 people at a Bali nightclub. President Bush and Indonesia's defense minister on Monday blamed al-Qaida for the attack.
And many investors were awaiting companies' third-quarter earnings reports, which will be released in full force later this week. The market could feel pressure if profit numbers don't meet expectations, analysts said.
"It's sort of a half-holiday mentality in the equity markets," said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co. "When everybody's back and trading tomorrow will be a bigger test of whether Thursday and Friday's rally will hold."
Gainers included Merck, which rose $2.30 to $49.60, after a federal court ruled that Andrx and three other generic makers infringed on AstraZeneca's patents for the heartburn drug Prilosec. AstraZeneca climbed $4.05 to $36.60, while Andrx fell $7.99 to $12.
Auto stocks took a hit on a brokerage downgrade of several industry companies from Merrill Lynch. General Motors declined $1.56 to $33.26, while Ford dropped 39 cents to $7.93.
Boeing fell 94 cents to $31.06 on news the world's largest aircraft maker would cut jet production through at least 2004, a year longer than expected, according to The Wall Street Journal.
TXU Corp. dropped $5.81 to $12.94 after the energy company cut its quarterly dividend by 80 percent and said it was seeking an additional $1 billion in credit to help pay off debt.
In Europe, Germany's DAX index was down 2.8 percent, France's CAC-40 fell 0.6 percent, and Britain's FTSE 100 dropped 0.6 percent. Stock markets in Japan and Hong Kong were closed for public holidays.
The U.S. bond market was closed in observance of Columbus Day.
