Stocks Bounce Back on Bargain Hunting
A late-day rally pushed stocks higher Friday as investors picked through the rubble of a five-day losing streak caused by jitters about corporate America’s accounting practices.
“After a week of emotional selling, people are seeing values,” said Eric Teal, a fund manager for Evergreen Asset Management. “Those gut-wringing moments, when investors give in, is where you can make significant gains in your portfolio. And with the economy recovering, stocks are offering a good opportunity here.”
Stocks that had been battered by accounting questions, such as conglomerate Tyco International and Irish drug maker Elan, jumped, and shares of telecommunications and financial companies climbed after being slammed in previous sessions. In addition, news that AOL Time Warner Chairman Steve Case bought 1million shares of AOL this week helped boost stocks in the last 90 minutes of trading.
The Dow Jones industrial average climbed 118.80 points, or 1.2%, to 9,744.24. The broad Standard & Poor’s 500 index rose 16.05 points, or 1.5%, to 1,096.22. The Nasdaq composite index rose 36.77 points, or 2.1%, to 1,818.88.
The day’s gains ended the five-session skid--the longest for Nasdaq and the S&P; 500 since the first week of trading after the Sept.11 terrorist attacks.
Winners led losers by 2 to 1 on the New York Stock Exchange and Nasdaq. Trading was moderate.
Despite Friday’s advance, the Dow was down 1.6% for the week, Nasdaq fell 4.8%, and the S&P; 500 declined 2.3%. The S&P; 500 has fallen four of the last five weeks.
Stocks have dropped recently amid a slew of bad news, including a tepid forecast from Cisco Systems, which fell 30 cents Friday to $16.76.
Part of the recent sell-off stemmed from accounting irregularities at Enron, which led to the firm’s collapse. Investors had homed in on companies with complex financial structures, such as Tyco. At least for now, analysts are saying jitters are receding.
Tyco, the most active stock on the New York Stock Exchange for the 10th straight session, added $1.83 to $29.88. J.P. Morgan Chase, Tyco’s leading lender, climbed $1.05 to $31.12.
Elan rose $1.31 to $14.80 after losing half its market value in the last five sessions, even though the company said regulators are probing its accounting practices.
AOL, whose shares recently had been falling partly because investors find it tough to assess its financial books after a slew of acquisitions, rose $1.91 to $27.36.
“It looks like the accounting concerns, with regard to the biggest-cap companies like [General Electric] and Tyco, are subsiding, and as such the bears are going to be hard-pressed to keep this issue rolling,” said Robert Robbins, chief investment strategist at SunTrust Robinson Humphrey.
Not all worries have passed, though. Wireless technology firm Qualcomm fell $1.65 to $37.46 after a research firm raised concerns about accounting issues in the company’s fourth-quarter and full-year financial reports.
In other market news:
* Gold mining shares surged as gold continued its climb, closing up $3.80 at $303.50 an ounce--its highest close in two years. The Amex index of gold mining stocks rose 2.5% and is up 35% year to date. Newmont Mining led the index higher, gaining 87 cents to $25.
* Corning climbed $1.08 to $7.52. The world’s No. 1 maker of fiber-optic cable said it sees first-quarter results largely in line with Wall Street’s expectations and said the quarter would mark the bottom for its businesses.
* Shares of companies with asbestos exposure were sold off after a New York state court jury ruled against a unit of diversified manufacturer Honeywell International to award $53.5 million to the family of a man who died of asbestos exposure, the plaintiff’s attorney said. The verdict was against Bendix, a former unit of AlliedSignal, which has merged with Honeywell. Honeywell tumbled $1.21 to $32.71.
* The dollar surged against the yen after the Bank of Japan met without announcing new measures to combat deflation and spur growth. Japan’s currency fell to a three-year low of 134.76 to the dollar from 133.50 Thursday.
Market Roundup, C4
