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Stocks rise on upbeat
Greenspan comments
NEW YORK >> An upbeat economic assessment by Federal Reserve Chairman Alan Greenspan prompted investors to bid stocks higher yesterday and resist the urge to take profits from weeks of rallies.
Greenspan's comments about the economy helped the market shake off earlier losses, which had followed news of a federal investigation into IBM's bookkeeping.
The Dow Jones industrial average closed up 25.14, or 0.3 percent, at 8,922.95, having gained 47.55 to reach its highest closing level since Nov. 27, when it stood at 8,931.68.
The market's broader gauges were also higher. The Nasdaq composite index rose 12.81, or 0.8 percent, to 1,603.56. The Standard & Poor's 500 index advanced 4.56, or 0.5 percent, to 971.56.
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange. Consolidated volume was light at 1.87 billion shares, below Monday's 2.20 billion shares.
The Russell 2000 index, the barometer of smaller company stocks, rose 1.24, or 0.3 percent, to 443.87. The NYSE composite index gained 11.57 to 5,481.59. The American Stock Exchange composite index inched higher by 0.52 to 942.66.
The gains were surprising given IBM's bad news and the fact that analysts said the market is due for some profit taking following weeks of rallies. All three of the major gauges have climbed higher in four of the past five weeks due to companies reporting better-than-expected first-quarter profits and economic news turning more positive.
Analysts credited yesterday's gains to Greenspan, who spoke before top central bankers in Berlin, saying that he sees indications of a "fairly marked turnaround" in the U.S. economy, with May data suggesting it has "stabilized."
"That adds to the bullish sentiment. The undertone of the market remains extremely strong," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.
Among yesterday's winners on Wall Street, Brocade Communications rose $1.22 to $7.26 after Merrill Lynch upgraded the networker to "buy" from "neutral."
Intel advanced 72 cents to $21.10 ahead of the mid-quarter update the chipmaker is slated to deliver tomorrow.
School Specialty climbed $3.76 to $25.45 after the school supplies company reported a fourth-quarter loss that was a penny a share lower than Wall Street anticipated.
IBM was easily the Dow's biggest loser, dropping $3.51 to $83.82 after announcing Monday that the Securities and Exchange Commission is investigating how the company booked revenue in 2000 and 2001.
Still, analysts were heartened to see IBM fail to bring other stocks tumbling along with it.
"One positive is ... we have not seen a heavy storm of selling," said Alan Ackerman, executive vice president at Fahnestock & Co.
Other losers included Martha Stewart Living Omnimedia, which sank $1.68 to $9.52 after the company announced that chairman and CEO Martha Stewart faces possible criminal charges involving an insider trading scandal.
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