Stocks rise on hopes
of extended rally

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By Hope Yen
Associated Press

NEW YORK >> Optimistic that Wall Street will be able to extend its October rally, investors sent stocks sharply higher today, giving the market's three major indexes their third straight winning week.

Analysts said investors were generally feeling upbeat after strong gains in the previous two weeks and were putting aside fears -- at least temporarily -- that Wall Street's current advance is a bear-market rally that will give up its gains.

"The market definitely has been feeling the path of least resistance in the upward direction. It's almost a regardless-of-the-news type of rally," said Arthur Hogan, chief market analyst at Jefferies & Co.

"The broader market is definitely in rally mode, and today is no different. We're basically having a drift up," he said.

Advancing issues outnumbered decliners nearly 2 to 1 on the New York Stock Exchange. Volume was light.

The Dow Jones industrial average climbed 126.65, or 1.5 percent, to close at 8,443.99. That came after dropping 176.93 points Thursday on investor concerns that a rally in the previous two weeks was too much, too soon.

The broader market also finished higher. The Nasdaq composite index rose 32.42, or 2.5 percent, to 1,331.13. The Standard & Poor's 500 index gained 15.15, or 1.7 percent, to 897.65.

All three gauges had their third consecutive winning week. The Dow finished the week up 1.5 percent, while the Nasdaq rose 3.4 percent and the S&P climbed 1.5 percent.

The Russell 2000 index, which tracks smaller company stocks, rose 6.61, or 1.8 percent, to 372.63. It was also up for the week, with a gain of 2.6 percent.

The price of the Treasury's 10-year note was up 3/16 point today, while its yield fell to 4.09 percent from 4.13 percent late yesterday. Two-year Treasury notes were up 5/32 point and yielded 1.98 percent, down from 2.08 percent yesterday.

The market lurched up and down on mixed economic reports before climbing in the afternoon. Analysts said they didn't think Democratic Sen. Paul Wellstone's death in a plane crash today led to the stock surge, although Democrats control the Senate by just one vote.

"It's a very, very sad story, but it's not affecting the fundamentals or the technicals of the market," Hogan said.

The Commerce Department reported today that new home sales rose 0.4 percent in September to a seasonally adjusted annual rate of 1.021 million, the highest rate on record. Economists predict 2002 will be the best year ever in terms of sales of both new and existing homes.

But another Commerce Department report showed a sharp 5.9 percent decline last month in orders to U.S. factories for durable goods. The drop, the biggest in 10 months, was much larger than the 2 percent decline analysts were expecting.

And the University of Michigan reported that consumer sentiment for October decreased to 80.6 from 86.1 in September, the lowest level since 1993, according to Dow Jones Newswires. Economists were expecting a reading of 81.3.

"The big picture economic and earnings data has been so-so, but the market is holding its own," said Bryan Piskorowski, market commentator at Prudential Securities. "The data suggests we shouldn't be going up, up and away, so we're getting a sloppy, sideways kind of action."

Analysts say investors have become more hopeful after the two-week rally on better-than-expected earnings boosted stocks. Since hitting a five-year low on Oct. 9, the Dow has gained more than 1,000 points.

But stocks remain vulnerable to bouts of profit-taking as investors worry about the market's long-term recovery. Lingering uncertainties including a possible war with Iraq and the strength of the market also continue to pressure the market, analysts said.

Gainers included Starbucks, which jumped $1.48 to $23.93, after the coffee retailer slightly raised its guidance for the fourth quarter and the full year.

Household International rose $1.26 to $24.09 after the consumer finance company said it raised $900 million in two securities offerings.

Cigna tumbled $24.21, or 38.1 percent, to $39.39, after the insurance and financial services company warned that third-quarter and full-year earnings would be lower than expected, citing higher costs.

Amazon dropped 56 cents to $19.30 after the Internet retailer reported a narrower third-quarter loss.

Overseas, Japan's Nikkei stock average finished 1.3 percent higher. In Europe, Germany's DAX index was up 0.4 percent, France's CAC-40 fell 0.6 percent, and Britain's FTSE 100 declined 1.3 percent.