Indexes Record Second Straight Day of Gains
The stock market eked out its first back-to-back gain in almost three weeks Thursday as Wall Street was encouraged by solid corporate results and upbeat comments from Federal Reserve Chairman Alan Greenspan about the U.S. economy.
“Greenspan told us things are looking better and that the big negatives on the economy last year are improving,” said Robert Barbera, chief economist for Hoenig & Co.
While the markets finished the day in positive territory, stocks lost nearly half of the gains made earlier in the day.
The tech-laden Nasdaq composite index closed up 20.20 points, or 1.1%, at 1,942.58, after rising about 1.8% earlier in the session. The Dow industrials gained 65.11 points, or 0.7%, to 9,796.07, after rising 126 points. The broader Standard & Poor’s 500 index added 3.97 points, or 0.4%, to 1,132.15, lifted by shares of makers of data storage systems, chip makers, defense contractors and oil drillers.
Winners led losers by 17 to 14 on the New York Stock Exchange and by 4 to 3 on Nasdaq. Trading was active.
Thursday marked a high point of the fourth-quarter earnings-reporting season. Results that topped Wall Street’s expectations came from such companies as Nokia, the world’s largest cellular phone maker, and EMC, the world’s largest maker of data storage systems. Nokia gained $1.09 to $23.30, and EMC jumped $2.27 to $16.83.
Despite the positive news, profits on average for S&P; 500 companies are down 21.6% for the second straight quarter, the worst showing in a decade.
Greenspan’s testimony to the Senate Budget Committee boosted stocks after he said, “There have been signs recently that some of the forces that have been restraining the economy over the past year are starting to diminish and that activity is beginning to firm.” This reinforced the view among traders that the central bank will not change interest rates when it meets next week, analysts said.
A drop in weekly U.S. jobless benefit claims also buoyed market sentiment. The number of workers applying for unemployment benefits fell last week to 376,000 from 391,000 in the previous week, signaling a stronger labor market than economists had forecast.
Shorter-term Treasury yields spiked. The yield on the two-year Treasury note rose to 3.14% from 3.01% on Wednesday. The yield on the benchmark 10-year T-note slipped to 5.01% from 5.02%.
In other market news:
* Biotechnology issues took a hit after some downbeat news from companies such as Amgen, the world’s largest biotech company. Amgen said net income fell 23% because of costs to end collaborations and inventory write-offs. Amgen shares fell $1.25 to $57.21. The American Stock Exchange’s biotech index fell 2.2%.
* Defense stocks shot higher as comments on government spending from Greenspan, coupled with several companies’ solid outlooks for 2002, sparked a broad rally. Shares of every major defense contractor gained ground, and the S&P;’s aerospace and defense index climbed 3.9%. Raytheon rose $2.14 to $34.24, Northrop Grumman gained $5.19 to $102.07, and Lockheed Martin rose $1.41 to $49.41.
* Oil drillers also moved higher, led by Halliburton, whose shares soared despite a cut in the company’s credit rating, after it said it is keeping the cost of asbestos damage claims under control. Halliburton rose $2.57 to $13.37, or 23.8%. The Philadelphia oil services index gained 3.7%.
Market Roundup: C5, C6
