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Nasdaq hits highest
level in 14 months
NEW YORK >> A burst of optimism about second-quarter earnings propelled stocks sharply higher yesterday, lifting the Dow Jones industrials more than 140 points. The Nasdaq composite index shot above 1,700 for the first time in 14 months.
A report that Microsoft might pay a special dividend and a survey from Goldman Sachs predicting a turnaround in tech spending contributed to the market's gains.
Analysts say investors are upbeat about second-quarter earnings, which companies start releasing this week, and are eager to buy stocks before a full-fledged rally gets under way.
"Market psychology has so much to do with where the market goes. All of a sudden people feel good again and they want to come to the stock market," said Michael Murphy, head trader at Wachovia Securities in Baltimore.
After barreling up as much as 190.91, the Dow closed up 146.58, or 1.6 percent, at 9,216.79. Last week, the Dow gained 0.9 percent last week despite a 72.63-point loss on Thursday. The market was closed Friday for Independence Day.
The broader market also surged higher. The Nasdaq composite index advanced 57.25, or 3.4 percent, to 1,720.71. The last time the Nasdaq finished above 1,700 was May 20, 2002, when it closed at 1,701.59. Yesterday's close was the index's highest since May 17, 2002, when it stood at 1,741.39.
The Standard & Poor's 500 index rose 18.72, or 1.9 percent, to 1,004.42.
Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange. Consolidated volume totaled 1.81 billion shares. On Thursday, when the market closed three hours early for the long holiday weekend, consolidated volume came in at 954.16 million shares.
The Russell 2000 index, which tracks smaller company stocks, rose 9.36, or 2.1 percent, to 465.71. The NYSE composite index jumped 80.70 to 5,639.16. The American Stock Exchange composite index inched up 1.41 to 977.57.
Analysts credited the advance mostly to investors feeling confident that companies will report better-than-expected second-quarter earnings, building on the strong first-quarter results that triggered the market's current rally. Some on Wall Street have already been calling this buying spree, which began in mid-March, the start of the next bull market.
"Come Friday, this bull market is four months old and hasn't corrected. When a bull market lasts that long and doesn't give ground, you embrace it," said Larry Wachtel, market analyst at Prudential Securities.
Microsoft rose 97 cents to $27.42 on a report in The Financial Times that the software giant might pay a special dividend of $10 billion to shareholders.
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