Stocks rise moderately
on investor optimism

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By Hope Yen
Associated Press

NEW YORK >> Investors charged ahead today and bought into Wall Street's three-week rally despite a brokerage downgrade of Wal-Mart.

Analysts said investors were more upbeat after the weeks of strong gains, allowing them to shake off bad news -- even about Wal-Mart, one of the market's most stalwart companies. But many investors were also cautious as they awaited reports on manufacturing and employment due out later this week, and their hesitance made for choppy trading throughout the day.

"This market for the last three to four weeks has shown an impressive ability to look past negative news. I think each time it does that, it gives investors increasing confidence that direction in the near term is up," said Brian Bush, director of equity research at Stephens Inc.

Advancing issues outnumbered decliners 8 to 5 on the New York Stock Exchange. Volume was light.

The Dow Jones industrial average rose 58.47, or 0.7 percent, to close at 8,427.41 having inched up 0.90 on yesterday. Earlier in the day, blue-chip stocks dropped as much as 61 points and climbed as high as 90 points.

The market's broader gauges also finished higher. The Nasdaq composite index climbed 26.19, or 2 percent, to 1,326.73. The Standard & Poor's 500 index gained 8.56, or 1 percent, to 890.71. The Russell 2000 index rose 5.54, or 1.5 percent, 374.17.

The price of the Treasury's 10-year note fell 3/32 today, while its yield rose to 3.95 percent from 3.94 percent yesterday. Two-year Treasury notes were up 1/16 point and yielded 1.73 percent, down from 1.77 percent yesterday.

Despite the uneven trading, analysts said investor sentiment appeared to be improving after pessimism about the economy and corporate profits drove the Dow to a five-year low on Oct. 9. Since then, blue chip stocks have risen more than 1,100 points.

They cited in particular the market's reaction to a report yesterday showing consumer confidence tumbling to its lowest level since 1993. Stocks initially dropped sharply before rebounding at the close.

"I think what investors are liking is the momentum the market had the last three-and-half weeks," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. "The market bent (yesterday), but it didn't break.

"So there was a lot of sideline cash that figured something was going on here, and saying, 'I better own stocks,"' he said.

Wal-Mart dropped $2.67 to $53.80 after Goldman Sachs downgraded the company's stock rating to "market performer," suggesting it won't continue to outperform the sector as the economy improves.

Citigroup rose 58 cents to $37.08 after the financial services company said it will separate its stock research from its investment banking operation to appease securities regulators who looking into possible conflicts of interest.

Overseas, Japan's Nikkei stock average finished higher 0.6 percent. In Europe, Germany's DAX index was up 3 percent, France's CAC-40 jumped 4 percent, and Britain's FTSE 100 rose 1.7 percent.