Late Rally Gives Wall Street a Lift
Wall Street staged a late rally Wednesday after mildly encouraging news from software maker Oracle launched a last-minute surge in technology stocks. The Dow Jones industrials gained more than 100 points.
The market seesawed much of the day, with the tech sector advancing solidly only on news reports that Oracle did not plan to issue an earnings warning for its fourth quarter.
Analysts said the response reflected Wall Street’s hunger to rally on any scrap of positive news and did not signal any improvement in market conditions.
“The market has been very oversold, and people have been very pessimistic, and we were due for a rally,” said Stephen Massocca, president of Pacific Growth Equities. “People had been betting Oracle would warn [of lower earnings]. When it didn’t, it became an excuse for people to buy.”
The Dow industrials closed up 108.96 points, or 1.1%, at 9,796.8, regaining nearly half of the 237 points it lost Monday and Tuesday.
Broader stock measures also rose. The Nasdaq composite index climbed 17.14 points, or 1.1%, to 1,595.26, and the Standard & Poor’s 500 index gained 9.21 points, or 0.9%, to 1,049.9.
Advancers led decliners by 5 to 4 on the New York Stock Exchange, and losers edged winners on Nasdaq. Trading was moderate.
It was the first session all three major indexes closed higher since May 23 and comes during a difficult period for the markets.
On Monday, the Dow fell to levels last seen in early February, while the Nasdaq recorded its lowest close since Oct. 2.
Wednesday started quietly. Wal-Mart Stores reported stronger-than-expected May sales and Avon reaffirmed its forecast, but the news failed to spark a broad rally.
Although blue chips trended higher for much of the session, technology didn’t catch up until the Oracle announcement.
Wal-Mart rose 96 cents to $54.96, and Avon surged $2.69 to $54.64. Oracle gained 84 cents, or 10.7%, to $8.66.
Although many analysts expect that May retail sales, many of which are due out today, will be disappointing overall, the buying spread to other retailers. Gap rose 63 cents to $15.18 after Prudential Securities upgraded the stock.
Investor optimism was helped by a report from the Institute of Supply Management, a private industry group, that showed the U.S. services sector grew at its fastest pace in nearly two years in May, racking up a fourth straight month of gains after last year’s recession.
The report helped the dollar reach a one-week high against the yen. It also pushed bond yields higher, with the yield on the 10-year Treasury note rising to 5.05% from 5.03% on Tuesday. Gold prices plunged $6.60 to $321.20 an ounce in New York trading as investors shifted money into stocks.
But analysts cautioned that concerns over corporate profits, accounting scandals and global political tensions--including another suicide bombing in Israel--will continue to bedevil the market.
“The buying you’re seeing today is more of a rebound than a change in the big picture,” said Robert Streed, portfolio manager of Northern Select Equity Fund. “The terrorism, accounting and other problems that have troubled the market for weeks now are still there.”
In other market news:
* Technology stocks got a boost from Oracle. Microsoft rose $1.68 to $51.66, and Intel added 68 cents to $28.18, despite spending much of the session at a loss. Intel is scheduled to release a mid-quarter update today. The stock is considered an indicator of where the broader tech sector is headed, and Oracle’s announcement might have allayed investors’ fears that Intel’s news would be bad.
* Nortel Networks fell for a second day, losing 20 cents, or 11%, to $1.60. The telecom gear maker plans to sell as much as $800 million in shares and equity units to raise cash as demand for its products slumps.
* Tyco International was the most active stock on the Big Board, up 53 cents at $17.30, as investors rushed in to scoop up the beaten-down stock. Tyco, already troubled by accounting-related concerns, was rocked this week by the resignation of its chief executive, who was charged Tuesday with tax evasion.
* Dow member Philip Morris dropped 36 cents to $57.36 after the Oregon Court of Appeals reinstated a $79.5-million punitive damage award against the tobacco maker in a lawsuit that alleged the company knew of the harm of smoking and concealed the facts.
Market Roundup, C8-9
