Tech Stock Rally Again Leads to Market Gains
Stocks rose Friday for a third straight session, posting solid gains despite the worst monthly unemployment report in more than six years.
Investors focused on data that showed fewer jobs were cut in December than in previous months; those numbers seemed to strengthen Wall Street’s conviction that there will be an economic turnaround this spring.
Technology stocks, which led the market this week, continued to advance, and the momentum again spread to the broader market.
The Dow Jones industrial average closed up 87.60 points, or 0.9%, at 10,259.74, its highest close since late August.
Broader indicators also rose. The technology-focused Nasdaq composite index advanced 15.11 points, or 0.7%, to 2,059.38. The Standard & Poor’s 500 index climbed 7.24 points, or 0.6%, to 1,172.51.
Advancers led decliners by almost 2 to 1 on the New York Stock Exchange and by about 4 to 3 on Nasdaq. Trading was active, continuing to pick up after the slow holiday season.
The day capped the third straight winning week for the Dow, which rose 1.2% for the week, and the S&P; 500, which gained 1%. The Nasdaq was up 3.6% for its second straight weekly gain.
“Investors are looking beyond the valley of that tragic event [the Sept. 11 attacks], to the peaks ahead,” said Alfred E. Goldman, chief market strategist for A.G. Edwards & Sons Inc. in St. Louis.
The market moved higher Friday even as the Labor Department reported the nation’s unemployment rate rose to 5.8% in December with businesses cutting 124,000 jobs. Still, the losses were less severe than in recent months. Job losses had averaged about 400,000 a month in October and November.
Investors took that decrease as an indication that the economy had bottomed and that a recovery was even more likely in the first half of the year. Stocks across the market rallied, with particularly strong gains in technology.
Intel advanced 27 cents to $35.79, benefiting for a second straight session from a J.P. Morgan analyst’s bullish comments that the company’s business might soon improve. Intel competitor Advanced Micro Devices, which soared 18% on Thursday in reaction to that assessment, rose another 63 cents to $20 on Friday.
Wall Street also bid DaimlerChrysler higher after the firm said its 2001 operating profit met the lower end of its expectations. The shares rose $1.22 to $45.62.
Pharmaceutical and consumer-goods companies didn’t fare as well, falling back again as investors moved into the technology sector. Merck dropped 14 cents to $58.89, while Procter & Gamble slipped 78 cents to $78.45.
The market has rallied significantly from the lows after the Sept. 11 attacks, reaching levels not seen since late summer. The Dow appears to have comfortably broken through the 10,000 level and Nasdaq is hovering above 2,000.
January historically is a strong time for the market, as the pressure from end-of-year tax selling lifts. Wall Street also is reacting to increasing signs that the economy’s worst troubles may be behind it. Besides the job figures released Friday, an Institute of Supply Management report Wednesday showed that manufacturing activity shrank in December, but not as much as expected.
Market watchers are encouraged but say that caution is the best approach for investors.
“For all intents and purposes, it does appear the recessionary forces are abating,” said Bryan Piskorowski, market commentator at Prudential Securities. “These are steps in the right direction, but it’s still difficult to call a turn here and know when things are exactly going to improve.”
Bond yields rose on concerns Friday’s economic data decreases the odds that the Federal Reserve will cut rates at its Jan. 29-30 meeting. The yield on the benchmark 10-year Treasury note rose to 5.13% from 5.11% on Thursday.
