Upbeat Investors Carry Stocks Higher
Blue-chip stocks rose to a two-month high Tuesday, buoyed by upbeat earnings from consumer products giant Procter & Gamble. Tech shares trotted higher on a growing sense that an economic rebound may be on its way.
“I have little doubt that the economy is turning around,” said Michael Ranis, a money manager at Bank Hapoalim. “We like the software companies and we’ve increased our allocation to raw materials, particularly aluminum and steel.”
The Dow Jones industrial average jumped 163.37 points, or 1.5%, to 10,898.34, its highest close since Feb. 13. P&G;, up $4.13 to $64.18, accounted for almost 17% of the blue-chip index’s gain.
The technology-laden Nasdaq composite index rose 52 points, or 2.5%, to 2,168.24, while the broad-based Standard & Poor’s 500 index gained 16.98 points, or 1.4%, to 1,266.44.
Winners outnumbered losers 19 to 12 on the New York Stock Exchange and 8 to 5 on Nasdaq. Trading wasn’t especially heavy on either market, in part because many stock exchanges around the globe were closed for the May Day holiday.
Gains in tech stocks built on last month’s strength. In April, the Nasdaq composite gained 15% to wrap up its fifth-strongest monthly performance ever, heightening hopes that a rebound is underway after a brutal March, when the index slumped 14.5%.
“April was a great month, and we’ve been able to hold our ground. There’s a feeling the market has found its bottom,” said Michael Lyons, senior trader at investment firm Morgan Stanley. “The stocks that took the most punishment are coming into vogue again.”
Other consumer stocks followed P&G; higher, including bleach maker Clorox, which rose 46 cents to $32.29, and Colgate Palmolive, up 61 cents at $56.46. Philip Morris, the world’s largest tobacco company, rose $1.99 to $52.10; Coca-Cola, the No. 1 soft-drink company, gained $1.44 to $47.63; and PepsiCo, the biggest snack-foods company, gained 84 cents to $44.65.
Stocks got an additional boost from a key gauge of U.S. manufacturing, which showed the sector is stabilizing, even though it is still mired in its nine-month recession.
The National Assn. of Purchasing Management’s closely watched gauge of activity ticked up to 43.2 in April from 43.1 in March.
Tech shares, which had been down for much of the session, turned positive late in the day as investors bet that the market may have reached a bottom after getting hammered in the first quarter.
“Investors are looking six months down the road [to an economic recovery] and at prices that look attractive, relative to what they were selling for at this time last year,” said Lyons. “This market is trading nicely; it’s not giving up any gains.”
Small-capitalization companies gained too after MicroStrategy posted a smaller-than-expected loss. The stock soared $1.06, or 23.4%, to $5.60.
Other winning sectors Tuesday included insurance, retail and entertainment.
Meanwhile, Treasury bond yields pulled back from their recent rebound.
Among Tuesday’s highlights:
* A new issue, Reliant Resources, a power generating and trading firm, delivered a boost to the dormant market for stock offerings. The company raised $1.56 billion in its new stock offering, and the shares surged $3, or 10%, to $33 on their first trading day.
But among other electric firms, DQE fell $6.68 to $23.75. The company, owner of a Pennsylvania utility, cut its 2001 profit forecast by more than half after posting first-quarter earnings that disappointed investors. The company sold its power plants last year.
* Boeing rose $1.63 to $63.43. The aerospace giant would be a main beneficiary of missile defense programs President Bush is considering, according to analysts. Other defense shares were broadly higher, including Lockheed Martin, up $1.97 to $37.13 and Northrop Grumman, up $2.88 to $93.13.
Market Roundup, C7, C8
