Wall Street Exhibits Signs of Stabilizing
Stock prices fluctuated but nonetheless showed signs of stability Tuesday as some investors looked for bargains after last week’s precipitous drop.
The major indexes closed modestly higher after withstanding several waves of profit taking from Monday’s big rally. Analysts were generally pleased with Wall Street’s performance and noted that just holding steady is good news, given stocks’ recent volatility.
“It’s very important that we stabilize,” said Will Braman, chief investment officer for John Hancock Funds. “You had a big day Monday after a complete sellout the week before. I’d be very happy to see the market go sideways for a couple of weeks to regain its breath.”
The Dow Jones industrial average rose 56.11 points, or 0.7%, to 8,659.97, bringing its two-day advance to more than 424 points. The blue-chip index plunged 1,369 points, or 14.3%, last week.
Broader indicators also climbed for a second session. The Nasdaq composite index added 2.24 points, or 0.2%, to 1,501.64, while the Standard & Poor’s 500 index gained 8.82 points, or 0.9%, to 1,012.27.
Trading was active on the New York Stock Exchange, where winners outnumbered losers by 4 to 3. Advancers and decliners were about even on Nasdaq.
“We’re still seeing buying and that’s a step in the right direction,” said Bryan Piskorowski, market commentator at Prudential Securities. “This has been a constructive session.”
The market calmly digested a Conference Board report showing consumer confidence this month at its lowest level since January 1996, falling to 97.6 from 114 in August. The numbers are watched closely because consumer spending accounts for two-thirds of the economy.
Analysts hesitated to attribute much to the market’s reaction to the data, saying the results weren’t surprising in view of the Sept. 11 terrorist attacks and already weak economy. They said the bigger concern for the market is still corporate profits, which show few signs of improving and which are expected to be further hurt by fallout from the attacks.
AOL Time Warner rose 30 cents to $32.80 despite warning late Monday it now expects slower growth in earnings and revenue this year because of a slump in advertising, which was worsened by the attacks.
Boeing, which tumbled last week as it announced job cuts related to the attacks, rose $1.53 to $34.33 after Chief Executive Phil Condit said the aircraft maker would remain profitable.
Meanwhile, more companies announced job cuts, although they were not necessarily connected to the attacks. Honeywell International rose 41 cents to $28.25 after saying the number of jobs it is eliminating in 2001 will total 15,800. It previously estimated 12,000.
Computer chip maker Advanced Micro Devices, which said it was cutting more than 15% of its work force, fell 76 cents to $9.05.
One of the biggest losers in the Dow was General Motors, which fell $1.87 to $41.36, a 4.3% loss, on apparent profit taking from Monday’s rally and concerns that falling consumer confidence will hurt auto sales.
Gainers included the large blue-chip stocks that investors tend to gravitate toward when the economy is murky. Wal-Mart Stores rose $1.12 to $48.80 on an upgrade from UBS Warburg, while the consumer goods company Procter & Gamble gained $1.54 to $71. Both are members of the Dow.
Also Tuesday, the National Assn. of Realtors reported sales of previously owned homes jumped to a record level in August, but have slowed in the wake of the terrorist attacks two weeks ago. Strong demand for homes has helped support the sagging economy, and the data appeared to bring into question how long that support would last.
“Right now, the consumer doesn’t have a lot to look forward to,” said Bill Barker, investment consultant at Dain Rauscher. “There will likely be more layoffs and certainly a weaker stock market and a stalling in house prices and price appreciation.”
Bond yields fell modestly on the confidence report. The yield on the benchmark 10-year Treasury note slipped to 4.70% from 4.71% Monday.
Overseas, Japan’s Nikkei stock average rose 1.5%. European stocks were mixed. Germany’s DAX index dropped 0.7%, while Britain’s FTSE-100 and France’s CAC-40 each gained 1.1%.
Market Roundup: C8, C9
