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Optimism buoys stocks
NEW YORK >> Wall Street extended its rally yesterday as investors shook off a warning from Texas Instruments and sent stocks higher on optimism about the economy. The Dow Jones industrials climbed above the 9,100 mark for the first time in 11 months.
"The market momentum here is quite strong," said Steven Goldman, chief market strategist, Weeden & Co. in Greenwich, Conn. "When we have a sustainable advance, market horizons tend to expand, with investors willing to look further into the future and shake off bad news."
Advancing issues outnumbered decliners 5 to 2 on the New York Stock Exchange. Consolidated volume was somewhat heavy at 1.94 billion shares, compared with 1.68 billion traded Tuesday.
The Dow closed up 128.33, or 1.4 percent, at 9,183.22, having advanced in seven of the last eight sessions for a net gain of 343 points. It was the highest level seen since July 8, 2002, when the blue chips finished at 9,274.90.
The broader market also rose. The Nasdaq composite index rose 18.35, or 1.1 percent, to 1,646.02. Earlier in the day, the tech-focused index fell as much as 15.45 points. The Standard & Poor's 500 index gained 12.64, or 1.3 percent, to 997.48. It was the highest finish since June 20, 2002, when the index stood at 1,006.29. The Russell 2000 index rose 4.54, or 1 percent, to 455.50.
The price of the Treasury's 10-year note closed down 7/32 point, while its yield rose to 3.22 percent from 3.20 percent Tuesday. Two-year Treasury notes fell 1/16 point and yielded 1.15 percent, up from 1.12 percent Tuesday.
Texas Instruments fell $1.53 to $18.86 after the chip maker lowered its second-quarter outlook, citing in part sluggish sales due to SARS fears in Asia.
"What's interesting in my opinion is that we've seen pieces of bad news that the markets could have responded to negatively, but unlike the last couple of years, the market isn't responding," said Subodh Kumar, chief investment strategist for CIBC World Markets.
"When a company issued a warning or there was an accounting scandal it used to tar the market, but now investors are just ascribing it to the individual company and not to the market as a whole," he said.
Stocks have surged in recent weeks on upbeat first-quarter earnings and hopes of an economic rebound by year's end. But with the Dow and S&P now trading at levels not seen in nearly a year, some traders believe the market is due for a pullback after moving upward so quickly.
Other analysts, however, believe stocks are firmly on an upward path.
"I believe we're in a bull market -- one that can carry the averages sustainably higher," said Goldman, citing in part low interest rates and the end of the war. "I think we can see a 45 to 50 percent move (from Oct. 9) over the next six months, with gains that are broad-based."
Lennar surged $5.70, or 8.2 percent, to $75.45 after the home builder said its fiscal second-quarter income rose 51 percent, handily beating analysts' expectations.
IBM rose $2.26 to $83.97 after Merrill Lynch added the company to its highly recommended list of stocks.
But Freddie Mac fell $1.50 to $50 after federal prosecutors initiated a criminal probe into possible misconduct at the nation's second-largest home-mortgage company.
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