Stocks Rise Amid Mixed Signals
Stock prices finally achieved positive results Wednesday after investors spent a wobbly session perplexed by another batch of mixed signals about the economy and earnings.
Buyers deemed a better-than-expected report on the economy to be a plus. But sellers fretted over the latest string of analysts’ downgrades of high-profile companies.
The Dow Jones industrial average finished up 50.66 points, or 0.5%, at 10,647.33, bouncing back from several dips into negative territory.
The market’s broader indicators followed the same path. The Nasdaq composite index rose 38.58 points, or 1.9%, to 2,031.24, while the Standard & Poor’s 500 index advanced 10.56 points, or 0.9%, to 1,223.14.
Advancing issues outnumbered decliners by slightly more than 3 to 2 on the New York Stock Exchange. Losers and winners were about even on Nasdaq. Volume was heavy on both markets.
Investors were feeling somewhat optimistic after hearing that the Conference Board’s index of leading economic indicators, a key forecasting gauge, rose 0.5% for May. The reading was better than the 0.3% analysts were expecting and a sign that the economy is poised to slowly recover.
Meanwhile, Federal Reserve Chairman Alan Greenspan, testifying before the Senate Banking Committee, noted continued weakness throughout the economy, while indicating that he doesn’t believe inflation is a problem.
His comments suggested he will back another cut in short-term interest rates when central bank policymakers meet June 26-27.
“He is saying what we need to hear,” said Arthur Hogan, chief market analyst at Jefferies & Co.
Yields on Treasury securities were mostly lower, continuing their recent slide.
But in the stock market, some of the biggest gains Wednesday came from safer sectors, including drugs and financials. That’s a sign that investors remain nervous about the economy and the market, analysts said.
Eli Lilly rose 81 cents to $79.52, while J.P. Morgan Chase, a Dow component, advanced $1.08 to $45.60.
However, some more economically sensitive issues also managed to move up. Heavy equipment maker Caterpillar climbed $1.61 to $55.50, while Wal-Mart Stores rose 94 cents to $49.80.
The Standard & Poor’s home-building index soared nearly 8%, continuing a four-session rally off a three-month low recorded last Thursday. Wednesday’s rise was powered largely by stronger-than-expected second-quarter earnings from Lennar, up $4.61 to $40.78, and word Wednesday from M.D.C. Holdings, up $1.95 to $34.85, that its second-quarter profit would top Wall Street’s most optimistic forecasts.
The Dow’s gain was limited somewhat by 3M, which fell $1.76 to $118.60 after ABN Amro reduced its rating on the company, citing a too-high stock price and a lack of earnings momentum.
In technology, cheaper stock prices factored into the buying. analysts said. Nasdaq had fallen seven straight sessions before rising slightly on Tuesday.
“Some stocks have reached a point where some buyers feel they can step ahead of the Fed’s next interest rate cut,” said Alan Ackerman, executive vice president of Fahnestock & Co.
The tech sector was led higher by Intel and Oracle, both of which have made bullish comments this week on their business. Intel rose 82 cents to $27.49 after Chief Executive Craig Barrett said in a CNBC interview he still foresees a turnaround in the second half of 2001. Oracle was up 76 cents at $17.52. Internet stocks also rose.
But tech gains were reduced somewhat by a string of downgrades of computer storage stocks by Merrill Lynch. Network Appliance fell $1.29 to $12, while Sun Microsystems slipped 48 cents to $14.18. JDS Uniphase, down 84 cents to $10, and Lucent Technologies, off 19 cents to $5.31, both hit new 52-week lows.
Market Roundup, C9-10
