Blue Chips Recover as Investors Seek Safety
Stocks posted gains Friday as investors looking for safe bets spurred a late-day recovery in a market riddled with worries over the strength of corporate profits and the soundness of accounting practices.
Investors trolled for old-line firms such as consumer products company Procter & Gamble and manufacturer 3M.
“People want to be invested, but they want to be invested safely,” James Awad, chairman of Awad Asset Management, told Bloomberg News. “They don’t want to be disappointed by earnings problems, accounting problems or balance sheet problems, so they’re gravitating to more defensive stocks.”
Buying by short sellers--investors who sold borrowed stock in hopes of buying it back at a lower price--also helped pull up Wall Street as they got out of the market ahead of the weekend.
The New York Stock Exchange reported Friday that the number of shares of NYSE-listed stocks that were sold short hit an all-time high in February after dipping in January. NYSE short interest was 6.46 billion shares as of Feb. 15, compared with 6.41 billion shares a month earlier.
The Dow Jones industrial average finished up 133.47 points, or 1.4%, to 9,968.15. The Nasdaq composite index rose 8.30 points, or 0.5%, to 1,724.54, after floundering in negative territory. The Standard & Poor’s 500 index added 8.89 points, or 0.8%, to 1,089.84. Winners led losers by 2 to 1 on the NYSE and by about 9 to 8 on Nasdaq.
For the week, the Dow edged up 0.7%, Nasdaq fell 4.4% and the S&P; 500 lost 1.3%. It was the fourth straight weekly loss for Nasdaq--the longest losing streak in almost a year.
The market endured a roller-coaster week of sudden rallies and sharp sell-offs as investors struggle to gauge the depth of corporate accounting problems and the health of the U.S. economy.
J.P Morgan Chase was the latest company pounded by worries over dealings with bankrupt energy trader Enron. News of a review by the Federal Reserve Bank of New York sent the banking firm’s shares to a three-year low before they rebounded to close at $28.19, down 95 cents.
Industrial and manufacturing stocks helped buoy the Dow. Procter & Gamble climbed $2.50 to $85.60. 3M rose $3 to $119. Construction equipment maker Caterpillar rose 80 cents to $52.68.
Treasury bonds capped their fourth straight winning week as investors worried about accounting issues continued to seek shelter outside the stock market. The yield on the benchmark 10-year Treasury note slipped to 4.84% from 4.85% on Thursday.
In other highlights Friday:
* Computer Associates fell $2.91 to $15.99 and was the NYSE’s most active issue. Salomon Smith Barney cut its rating on the software maker to “neutral” from “buy” after the firm said it was being investigated by federal regulators.
* Calpine lost 21 cents to $7.11 on concerns that a delay in completing a $1-billion credit line may mean less favorable borrowing terms for the power company.
* Exxon Mobil rose $1.57 to $40.72. Oil prices made minor gains and oil stocks rose amid speculation that the United States might attack Iraq and concerns that Russia may stop cooperating with OPEC-led production cuts.
* Circuit City slumped $7.04 to $16.55 after the consumer electronics retailer said sales are running below expectations and remodeling and store relocations will shave earnings in 2002 and 2003.
* Petco Animal Supplies gained $1 to $20 as the retailer made its return as a publicly traded firm. Petco priced 14.5 million shares at $19 a share Thursday. It trades under the symbol PETC on Nasdaq.
