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Techs lead small rally
NEW YORK >> A surge in technology shares led a moderate rally on Wall Street yesterday as investors sought bargains, picking up interest rate-sensitive stocks that may have been oversold in the market's latest downturn.
Investors bought tech shares, small-cap stocks and financial companies despite the fact they were the most vulnerable to the impact of a potential rate hike, which could come at the next Federal Reserve meeting in June. Interest rate fears sent the three major indexes into a 3 percent plunge during the previous three sessions.
Analysts said the unusual buying choices represented bargain hunting by some investors, but noted that volume was much lighter than during the three-day selloff.
"Right now, you're seeing the markets pause a bit. I think we're re-evaluating the selloff to see if it's been an overreaction to the interest rates," said Stephen Sachs, director of trading for Rydex Investments. "We definitely have room to go down more, but near-term, say this week, we're at some very near-term support."
The tech-concentrated Nasdaq composite index gained 35.28, or 1.9 percent, to 1,931.35 after dipping below the 1,900 mark at Monday's close.
The Dow Jones industrial average closed above 10,000, one day after slipping below that mark for the first time since December. The Dow gained 29.45, or 0.3 percent, to 10,019.47.
The Standard & Poor's 500 index was up 8.33, or 0.8 percent, at 1,095.45. The Russell 2000 index of smaller companies was up 10.81, or 2 percent, at 548.67.
Advancing issues outnumbered decliners by a 3-to-1 margin on the New York Stock Exchange, where consolidated volume came to 1.91 billion shares, compared to 2.37 billion on Monday.
The price of the Treasury's 10-year note closed up 1/4 point, while its yield fell to 4.76 percent from 4.80 percent Monday. Two-year Treasury notes were up 1/32 point and yielded 2.57 percent, down from 2.59 percent Monday.
Buying was spread nearly across the board, with only healthcare and other defensive stocks suffering as investors took the chance on higher risk stocks -- at least for the time being. Analysts did not believe yesterday's rally was indicative of momentum in the markets, however, noting that rate fears remained among many investors.
"This is a period of extreme uncertainty. We're going to bounce around a lot between optimism and pessimism until the Fed's next meeting in June," said Brian Bruce, director of global investments at PanAgora Asset Management Inc. "Earnings have been fabulous. If you focus on that, things are attractively priced. If you're concerned about rates and the uncertainty there, then the market trades down because the uncertainty means more risk."
May Department Stores Co., operator of Lord & Taylor, Filene's, Hecht's and Foley's stores, lost 86 cents to $27.92 after missing Wall Street estimates by a penny. The company posted earnings of $76 million.
Church & Dwight Co., maker of Arm & Hammer household products, fell 20 cents to $44.60 despite posting a 43 percent jump in first quarter profits due to strong sales of cleaning products.
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