NEW YORK >> Wall Street bounced back today following a week of declines, bolting higher as bargain hunters picked up stocks on expectations of a year-end rally. Bargain-hunting lifts stocks
By Hope Yen
Associated PressStill, volume was light, and the Federal Reserve's widely expected decision to leave short-term interest rates unchanged did little to encourage more buyers to enter the market. Analysts said many were avoiding commitments until they see more evidence the economy is back on track.
"Right now, the market is trying to regain its confidence," Robert Harrington, co-head of listed block trading at UBS Warburg. "The next step people would like to see is some signs that growth is returning as opposed to just stabilizing."
The Dow Jones industrial average rose 100.85, or 1.2 percent, to close at 8,574.26, according to preliminary calculations. Prior to today, blue chip stocks dropped 458 points over seven sessions.
The broader market also finished higher. The Nasdaq composite index climbed 23.62, or 1.7 percent, to 1,390.76. The Standard & Poor's 500 index gained 12.45, or 1.4 percent, to 904.45. The Russell 2000 index rose 7.18, or 1.9 percent, to 393.47.
The price of the Treasury's 10-year note was down 3/32 point this afternoon, while its yield rose to 4.05 percent from 4.04 percent yesterday. Two-year Treasury notes were down 1/16 point and yielded 1.87 percent, up from 1.84 percent yesterday.
The Fed, in its statement, said currently low rates are "providing important ongoing support to economic activity."
Jack Caffrey, equities strategist at J.P. Morgan Private Bank, said the comments fell in line with what most investors anticipated.
Investors also welcomed President Bush's choice of investment banker William H. Donaldson to head the Securities and Exchange Commission, replacing Harvey Pitt, who resigned under pressure. Donaldson's nomination must be confirmed by the Senate.
Hugh Johnson, chief investment officer at First Albany Corp., said Wall Street preferred someone like Donaldson, a co-founder of the investment banking firm Donaldson, Lufkin & Jenrette, who served as chairman of the New York Stock Exchange from 1990 to 1995.
"He has extensive experience, he's well-known, and he's highly regarded," Johnson said.
Analysts say Wall Street's recent declines aren't surprising given the market's two-month rally. They say many investors have been cashing in quick profits but are looking to push stocks higher by month's end.
Still, analysts acknowledge that concerns about a war with Iraq and the strength of corporate earnings.
"Ultimately, investors will look to earnings and valuations," Caffrey said.
Avon Products rose $2.50 to $54.75 after raising its fourth-quarter outlook above the company's estimates and in line with analysts' expectations.
Nokia fell 59 cents to $17.43 after the world's largest mobile phone maker said its fourth-quarter revenue would be weaker than expected.
Overseas, Japan's Nikkei stock average finished 0.3 percent lower. In Europe, France's CAC-40 rose 0.9 percent, while Britain's FTSE 100 fell 0.2 percent and Germany's DAX climbed 3.3 percent.
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