Stocks Post Gains, Snapping Dow’s Losing Streak
The Dow industrials on Wednesday struggled to their first winning session since July 5, and the broad market also closed higher in volatile trading.
Continued strength in many battered technology stocks boosted hopes that the market has reached at least a near-term bottom.
The Dow closed with a gain of 69.37 points, or 0.8%, at 8,542.48, though it had been up as much as 250 points early in the day.
It was the first positive session for the Dow after losing 906 points, or nearly 10%, since July 8, and was the first time all major stock indexes closed higher since July 5.
The Standard & Poor’s 500 added 4.99 points, or 0.6%, to 906.04, inching up from Tuesday’s five-year low.
The Nasdaq composite, dominated by tech stocks, rose 21.99 points, or 1.6%, to 1,397.25. Nasdaq has gained 3.8% since reaching a five-year low of 1,346 on July 10.
Stocks have been hammered for the last eight weeks as corporate financial scandals have depressed investor sentiment already weighed down by concern about the economy and the threat of more terrorist attacks.
The latest sell-off has left the S&P; 500 down 41% from its all-time high reached in March 2000. That is the deepest decline since the 48% loss in 1973-74. Nasdaq is down 72% from its peak.
Now, “you’re witnessing a pitched battle between two camps,” said Kevin Caron, market strategist at Ryan, Beck & Co. in Livingston, N.J. “You’ve got the bearish contingent concerned about accounting scandals, and you’ve got value investors who are looking for bargains.”
The market may have been responding positively Wednesday to Federal Reserve Chairman Alan Greenspan, who gave a second day of congressional testimony on the economy. He repeated that he is optimistic about the economy’s prospects for continued recovery. “At this moment, we are still on path.... We are poised for a reasonably good expansion,” he told a House committee.
Greenspan also said he doesn’t believe that CEOs of all publicly held companies should have to personally verify the accuracy of company finances with federal regulators, as the Securities and Exchange Commission now is requiring.
Strong second-quarter earnings reports from a number of major companies, including Citigroup and United Technologies, helped the mood Wednesday, traders said. Citigroup rose 73 cents to $36.93. United Technologies jumped $3.05 to $64.95. Both are in the Dow.
Many tech stocks advanced, building on recent gains from multiyear lows. Intel rose $1.08 to $19.44, Yahoo added 50 cents to $14.26, Microsoft gained 75 cents to $52 and Cisco Systems was up 53 cents to $14.80.
But Apple Computer slid $2.23 to $15.63 and Broadcom fell $1.25 to $19.74.
Shares of major credit card companies plummeted on worries about loan losses. Capital One Financial dived $20.12 to $30.48, and Metris slid $2.22 to $3.85.
Analysts were encouraged that rising stocks outnumbered losers by 18 to 14 on the New York Stock Exchange and by 19 to 15 on Nasdaq, in heavy trading.
Also, a weekly survey of investment newsletter writers by Investors Intelligence showed that the percentage of newsletters that are bearish on stocks, 39.6%, has topped the percentage that are bullish, 35.4%, for the first time since September. That is often a “contrarian” indicator, meaning bearishness often reaches a peak just before the market rebounds.
Still, many analysts are reluctant to suggest that the market’s decline has halted for good, because stock valuations relative to underlying earnings remain far above levels usually seen at market bottoms.
More immediately, the market needs to sustain a rally over a number of days to attract more short-term buyers, experts said.
“What we need to do is get investor sentiment turned around. But it’s hard to do that because we can’t get any continuity on the upside here. This is the kind of market that just crushes the spirit of investors,” said Michael Murphy, head trader at Wachovia Securities.
In other trading Wednesday, the dollar was steady against the euro and climbed modestly against the yen. Treasury bond yields were mostly flat after surging Tuesday.
In Europe stock markets rebounded sharply. The German market gained 2.9% and the British market jumped 4.2%.
Market Roundup, C5-6
