Investors End Dow’s Losing Streak
Buyers still worried about the economy but unable to resist bargain prices went back to Wall Street late in Wednesday’s session, giving stocks some modest, hard-fought gains.
Investors overcame their misgivings about earnings warnings from Merck and American Express, which had sent prices falling for much of the day.
“Investors want to be buyers at lower prices, and I guess we just hit lower prices,” said Scott Bleier, chief investment strategist at Prime Charter Ltd. “There is a big desire to get money back to work on weakness, which is why the bouts of profit taking have been limited. Money wants to get into stocks.”
The Dow Jones industrial average closed up 6.44 points, or 0.1%, at 9,894.81, after falling as much as 81 points earlier. The gain snapped a four-day losing streak for the Dow.
The broader market followed the same path, turning losses into gains in the last 30 minutes of trading. The Nasdaq composite index ended up 9.45 points, or 0.5%, to 2,011.38, having lost 26 points at one point. The Standard & Poor’s 500 inched up 0.31 of a point, or less than 0.1%, to 1,137.07, recovering from an earlier 10-point loss.
Analysts were unfazed by the selling that persisted for most of the session, and said the market’s post-attack comeback is more important than occasional downturns.
The Dow is 20.1% above its Sept. 21 low for the year of 8,235.81. The Nasdaq is up 41.3% from its Sept. 21 low; the S&P;, up 17.7%.
“To come back from that kind of hit is a herculean feat, and basically states there will be an economic recovery next year,” Bleier said.
The market had two reasons for not trading significantly higher near Wednesday’s close: Merck and American Express, both members of the Dow.
Merck fell $2.18 to $58.52, having on Tuesday projected no growth in earnings a share next year, mainly due to expiration of the patent on its key ulcer drug, Prilosec.
“The Merck warning took a toll on confidence,” said Alan Ackerman, executive vice president of Fahnestock & Co.
American Express declined 84 cents to $33.42, after warning Wednesday of weaker profit in the fourth quarter, and announcing 5,500 to 6,500 job cuts.
The market drew some strength from a positive outlook from Dow industrial Procter & Gamble. P&G; soared $3.25 to $79.95, after an announcement Tuesday that it expects to beat analysts’ earnings estimates for the current quarter by 2 to 3 cents a share.
But much of the market’s late-day boost came from the technology sector, which has suffered the most from the economic slump and which many analysts have predicted will ultimately lead the market higher. IBM rose $1.70 to $123.20, and Intel climbed 89 cents to $34.08.
Declining issues beat advancers 8 to 7 on the New York Stock Exchange and were about even on Nasdaq. Trading was active.
In other market news:
* NetScreen Technologies shares surged 48% in their first day of trading. To meet investor demand, the company, which makes anti-hacker software, had doubled the size of its first-time stock offering. NetScreen, which trades on Nasdaq under the symbol NSCN, rose $7.72 to $23.72.
* Merck’s woes infected other drug stocks. Bristol-Myers Squibb fell $3.30 to $50.45, Pfizer lost 11 cents to $40.24, Schering-Plough was off $1.79 to $36.86, and Eli Lilly dropped $1.39 to $79.01.
* Yields on longer-term Treasury securities continued to fall in reaction to the Federal Reserve’s interest rate cut Tuesday--the 11th this year by the central bank. The yield on the benchmark 10-year Treasury note slipped to 5.00% from 5.05% on Tuesday. The yield on the six-month T-bill was unchanged at 1.72%.
