Markets Inch Up on Bush Proposal
The prospect of more government help for the economy bolstered Wall Street once again Friday as President Bush’s call for a stimulus plan pulled stocks out of a moderate early slump.
Bush’s comments helped the market shake off earnings warnings from Sun Microsystems, Advanced Micro Devices and Gateway and allowed the tech-laden Nasdaq composite index to claim its first four-day winning streak since June.
Still, investors were wary of making big commitments because an economic turnaround is still uncertain at best. Analysts say any gains on Wall Street will be vulnerable while investors await signs that business is improving and while U.S. retaliation looms for the Sept. 11 terrorist attacks.
“We’re going to be going sort of day to day as far as what our feeling is on stock prices, based on the economic and political events,” said Arthur Hogan, chief market analyst for brokerage Jefferies & Co. “It’s still a very tenuous time.”
The Dow Jones industrial average closed up 58.89 points, or 0.7%, at 9,119.77 on Friday after sagging most of the day. The blue chip index has now recouped 884 points, or nearly 65%, of the 1,369 points lost in the first week of trading after last month’s attacks.
For the week the Dow rose 3.1%.
Like the Dow, broader market indexes ended higher Friday after falling in early trading. The Nasdaq composite rose 7.99 points, or 0.5%, to 1,605.30. It has climbed more than 120 points in the last four sessions. The last time Nasdaq had four consecutive wins was June 26-29.
For the week Nasdaq gained 7.1%.
The Standard & Poor’s 500 index inched up 0.2% to 1,071.38, adding 2.9% for the week.
Advancing and declining issues were about even on the New York Stock Exchange on Friday in active trading. Losers led winners by 19-16 on Nasdaq.
Before Bush spoke the fresh string of profit warnings had halted the tech rally sparked by positive earnings outlooks from Cisco Systems on Tuesday and Dell Computer on Wednesday.
The warnings from Sun, AMD and Gateway weren’t surprising to most analysts, who have been cautioning investors that most tech firms continue to struggle with excess inventory and weak demand.
Investors should be as skeptical of optimistic comments from tech companies now as they were before the terrorist attacks, argued Richard A. Dickson, a market analyst at Hilliard Lyons in Louisville, Ky.
“How many times have we heard this from tech?” Dickson said of the positive comments from Dell and Cisco.
Stock performance of the companies that warned Friday was mixed. AMD, the computer chip maker, fell 40 cents to $8.60 after forecasting bigger-than-expected third-quarter losses. The stock fell as low as $8.04.
But Sun rose 58 cents to $9.87 despite warning of a wider loss for its fiscal first quarter, and Gateway, which issued a third-quarter warning, gained 15 cents to $5.
Dell, meanwhile, rose 24 cents to $22.56, and Cisco advanced 52 cents to $14.94 after each traded lower most of the day.
Analysts said the market was not surprised by a report showing that the economy lost a net 199,000 jobs last month, the largest loss in more than a decade. The Labor Department’s report showed that the labor market was under intense pressure even before the Sept. 11 attacks.
Even so, many of the biggest gainers Friday were stocks of companies that are less likely to see demand collapse in a weaker economy--firms in sectors such as food, drugs and other consumer products.
Hershey Foods rose 81 cents to $64.30, Procter & Gamble climbed $1.49 to $72.69, Avon Products jumped $1.10 to $47.31 and Johnson & Johnson advanced $1.04 to $55.49.
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Market Roundup, C4
