Stocks Extend Rally as Optimism Builds in Technology Sector
Wall Street extended its new year’s rally into a second day Thursday as growing hopes for a revival of the computer industry in 2002 hoisted the Dow Jones industrial average to its highest close since August.
“Folks are finally moving money out of money-market funds and bond funds and back into the equity market ... obviously they’re looking for places that are seeing signs of improvement,” said Gail Seneca, chief investment officer at Seneca Capital Management.
The Dow industrials rose 98.74 points, or 1.0%, to 10,172.14, powered by technology members such as Intel and Microsoft. It was the Dow’s highest close since Aug. 28.
The tech-focused Nasdaq composite index rose 65.02 points, or 3.3%, to 2,044.27. The index closed above the 2,000 mark for the first time since Dec. 18. The Standard & Poor’s 500 index gained 10.6 points, or 0.9%, to 1,165.27.
Investors were unfazed by news that a threatening letter containing a powdery substance--later found to be harmless--was discovered in the office of Senate Majority Leader Tom Daschle. Reports of letters containing the deadly bacteria roiled the market late last year.
Wall Street expects the economy, now mired in recession, to resume growth this year. Investors’ optimism has helped pull the stock market well off of three-year lows hit on Sept. 21. Also, the relative lack of fourth-quarter earnings warnings so far has encouraged investors to focus on company fundamentals, analysts said.
Still, jitters about the fate of ailing corporate profits are keeping investors wary. Software maker Peregrine Systems, for one, was hammered after warning of a fiscal third-quarter loss due to the economic downturn. Peregrine fell 36%, losing $5.24 to $9.27.
Semiconductor shares rose as investors bet chip stocks would be the first to recover in an economic rebound. The Philadelphia Stock Exchange semiconductor index shot up 8.3% and has surged more than 50% since Sept. 21.
In other market news:
* Bond yields fell on a report that claims for unemployment benefits rose unexpectedly last week, raising hopes the Federal Reserve may cut interest rates again. The yield on the benchmark 10-year Treasury note fell to 5.11% from 5.16% Wednesday.
* Kmart fell to new lows, dropping 65 cents to $4.09 after Morgan Stanley cut its estimates on the company’s earnings for fiscal 2002 and 2003. It took a hit Wednesday after a Wall Street analyst suggested the discount retail chain might face bankruptcy.
* Pasadena-based Gemstar-TV Guide International slid 9% after an analyst downgraded the stock because of concerns the company won’t win a lawsuit against Echo- Star Communications. Gemstar’s shares declined $2.58 to $25.46. EchoStar fell 26 cents to 28.49.
* Tyco International fell for a second day in a row, as investors reacted to a research report that speculated the acquisitive conglomerate may be the subject of a new investigation by the Securities and Exchange Commission. Tyco, which denied the speculation, slumped $2.27 to $54.98.
* General Motors rose 71 cents to $49.35, and Ford Motor advanced 51 cents to $16.73. The world’s two largest auto makers said U.S. vehicle sales rose in December, aided by no-interest financing for buyers.
