Bargain hunters lift stocks
By Amy Baldwin NEW YORK >> Investors cautiously extended Wall Street's rally into a second session today as lower prices temporarily offset the market's concerns about war.
Associated PressThe advance, also supported by better-than-expected earnings and economic news, was unsurprising after the market's three straight losing weeks and big drop for the month of January.
Still, analysts were doubtful any gains would be long lasting given investors' ongoing fears that a war with Iraq would further hurt the frail economy. In a sign of investors' caution, trading volume was extremely light and stocks were unable to hang on to their biggest gains today.
"(The market) is not up in a convincing way. There is very little enthusiasm for buying equities at the moment ... The prospect of war still looms large in many people's thinking," said Alan Ackerman, executive vice president at Fahnestock & Co.
The Dow Jones industrial average closed up 56.01, or 0.7 percent, to 8,109.82, after climbing as much as 98.27. The Dow lost 1 percent last week, its third straight losing week. Today, the blue chips added to Friday's gain of 108.68, their biggest advance in four weeks.
Advancing issues had a narrow lead over decliners on the New York Stock Exchange, where trading was very light.
The broader market was mixed, having suffered three consecutive weekly declines as well. The Nasdaq composite index rose 2.88, or 0.2 percent, to 1,323.79. The Standard & Poor's 500 index advanced 4.62, or 0.5 percent, to 860.32. But the Russell 2000 index fell 1.92, or 0.5 percent, to 370.25.
The price of the Treasury's 10-year note was down 1/4 point this afternoon, while its yield rose to 3.99 percent from 3.96 percent late Friday. Two-year Treasury notes were down 1/32 point and yielded 1.67 percent.
Economic news that exceeded Wall Street's expectations contributed to the market's gains. The Commerce Department reported construction spending jumped by 1.2 percent in December. The increase was larger than the 0.3 percent increase that analysts were predicting and marked the biggest gain in 10 months.
And the Institute of Supply Management said U.S. manufacturing activity grew for the third straight month in January, although the pace slowed. The private industry group said its index manufacturing activity had a reading of 53.9, slipping from a revised 55.2 for December. A reading above 50 indicates expansion in activity, while a reading below 50 points to contraction.
Positive earnings news contributed to the market's upturn. However, with fourth-quarter earnings season nearly over, Wall Street was losing a potential catalyst for gains.
Brokerage upgrades also provided some lift. Eli Lilly advanced $1.44 to $61.68 after Prudential Securities raised its recommendation on the drug maker to "buy" from "hold."
The markets observed moments of silence in memory of the space shuttle Columbia astronauts. Saturday's disaster depressed the stocks of aerospace companies including Boeing, which fell 48 cents to $31.11, and Lockheed Martin, off $1.50 at $49.55.
Japan's Nikkei stock average finished up 1.9 percent. France's CAC-40 rose 0.7 percent, Britain's FTSE 100 climbed 3.4 percent and Germany's DAX index gained 0.2 percent.
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