Stocks Rally After Three-Day Pullback
Stocks rallied Wednesday after three days of losses as investors snapped up shares across a broad range of industries.
Some stronger-than-expected data helped boost the case that the economy--and the stock market--have seen their lows, some analysts said.
The bond market also took that view as yields jumped again.
On Wall Street, the Dow industrials surged 170.86 points, or 1.6%, to 10,625.20, recouping most of the losses of the last three sessions.
The Nasdaq composite index posted a stronger percentage gain, adding 2.1% as it jumped 43.19 points to 2,059.80. The index had fallen 166 points during the previous three sessions, but it’s still up 26% from its low of 1,638.80 reached April 4.
Winners topped losers by more than 2 to 1 on the New York Stock Exchange and by 24 to 15 on Nasdaq in active trading.
Surprising strength in housing sales in March, reported Wednesday, helped drive home-builders’ shares up sharply and boosted stocks of other suppliers to the construction industry.
Quarterly earnings reports from such giants as Walt Disney and mortgage financier Freddie Mac also helped stoke optimism. Disney surged $2.23 to $30.81 after reporting better-than-expected results Tuesday. Freddie Mac gained $1.24 to $64.39 in the wake of its profit report.
Still, amid dismal first-quarter earnings overall, some analysts said investors are likely to remain concerned about how long it will take for business to fully recover from the slowdown of the last six months.
“People still worry more about the outcome of any first-quarter reports that have yet to come out and worry about second- and third-quarter results ahead of us,” said Richard McCabe, analyst at Merrill Lynch & Co.
“The evidence still needs to mount that the economy is out of the woods and that a year from now the earnings picture will be better. As long as the picture is unclear, this herky-jerky trading will continue,” said Joe Battipaglia, investment strategist for Gruntal & Co.
But Wall Street bulls have been energized by the rebound in many stocks since early April, and by the Federal Reserve’s surprise interest rate cut last week. The Fed meets again May 15, and many economists believe another rate cut will happen at that meeting.
Yet as stocks rallied Wednesday the bond market sold off. Treasury yields rose across the board. The yield on the 2-year T-note rose to 4.23% from 4.14% Tuesday.
Long-term bond yields have been rising for several weeks, reflecting expectations of rebounding economic growth, analysts say.
Among Wednesday’s highlights:
* The Dow was led higher by Disney and Philip Morris, which surged $2.75 to close at $50.70 after the company announced cigarette price increases.
Also, GE gained $1.82 to $47.81.
* In the home-building sector, KB Home surged $1.88 to $31.11, Pulte rose $2.43 to $47.01 and Ryland Group jumped $3.80 to $48.80.
Among suppliers to the housing market, Whirlpool rose $1.32 to $54.56 and Home Depot gained $1 to $46.02.
* Heavy-construction shares were led higher by Fluor, up $3.50 to $51.70, and Jacobs Engineering, up $2.05 to $64.05.
* In the tech sector, Microsoft rose $2.14 to $69.69, IBM added $2.18 to $114.85, Dell Computer rose $1.14 to $26.99 and Broadcom gained $4.08 to $38.10.
But Intel eased 11 cents to $29.03 and Cisco Systems lost 53 cents to $15.73.
* Drug stocks gained. Bristol-Myers Squibb climbed $1.96 to $56.86 on healthy first-quarter earnings that were boosted by prescription drug sales. Rival Eli Lilly jumped $2.28 to $81.34.
HMOs also were strong. WellPoint Health leaped $5.94 to $94.15 in advance of its earnings report. UnitedHealth rose $2.24 to $63.
* Many energy stocks continued to attract buyers. Exxon Mobil rose $1.60 to $89.09, with Halliburton up $1.06 to $38.62 and Apache up $1.82 to $65.32.
An energy initial public offering this week, Aquila, rose 23 cents to $28.08. It had surged $3.85 on Tuesday, its first day of trading. The firm is a spinoff from UtiliCorp.
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Market Roundup: C11, C12
