Rally on Wall Street Continues
Wall Street on Monday extended the rebound of late last week, as bargain hunters sought out technology and financial issues and pushed major market indexes to their best day in more than a month.
The Standard & Poor’s 500 index has fallen in 11 of the last 13 weeks, bringing stock prices down to attractive levels given the slowly improving economy, strategists said.
“After weeks of selling, the selling pressure has dried up” at least for the moment, said Robert Arancio, head of Nasdaq trading for Lehman Bros. “People are more comfortable on a value perspective to buy and hold. They’re starting to look past 2002 and look forward into 2003.”
The Dow Jones industrial average surged 213.21 points, or 2.3%, to 9,687.42. The broader S&P; 500 jumped 28.90 points, or 2.9%, to 1,036.17. It was the biggest one-day gain for both since May 8.
The technology-laden Nasdaq composite index gained 48.55 points, or 3.2%, to 1,553.29, its best one-day gain since May 14.
Winners led losers by more than 2 to 1 on Nasdaq and the New York Stock Exchange. But trading, though active, was below last week’s levels when volume surged amid heavy selling.
Financial stocks led the rally, with Citigroup up $2.63 to $42.83 and J.P. Morgan Chase advancing $2.48 to $35.48. Lehman Bros., which is expected to report quarterly profit results today, rose $2.81 to $62.65.
“Investors like these names because they’re inexpensive and they have, on a long-term basis, a positive outlook,” said John Lyons, president of Keefe Managers.
Among battered tech stocks, Texas Instruments rose $1.24 to $26.64, Intel recovered $1.28 to $22.56 and Cisco Systems gained 77 cents to $15.07.
Monday’s rally prolonged a rebound that began late Friday when the Dow erased most of an early 241-point plunge and the S&P; 500, which had fallen to its lowest since the aftermath of the Sept. 11 terrorist attacks, closed down less than 3 points.
Although the follow-through Monday was encouraging, analysts warned that the market has failed to hold previous surges. From May 7 to May 17, the S&P; 500 rallied almost 6% before tumbling anew.
Some pros said they aren’t aggressively buying yet because several clouds still cast a shadow, such as geopolitical turmoil, questions over corporate America’s accounting and lackluster earnings overall.
“It doesn’t take much good news to give us a one-day rally in the market, but for this to convince money managers to start putting money back in, we need to see this continue for two or three days,” said Ned Riley, chief investment strategist for State Street Global Advisors.
With investors snapping up equities, safe-haven investments such as gold retreated. The Amex index of gold stocks fell 5%, reflecting losses in stocks such as Newmont Mining, down $1.46 to $27.50, and Goldcorp, off 76 cents to $9.65.
Also, bond yields rose for the first time in six trading sessions as investors moved money from bonds into stocks. The yield on the benchmark 10-year Treasury note climbed to 4.84% from 4.80% on Friday. The dollar gained against the euro and yen.
In other market news:
* Among blue chips, McDonald’s rose 70 cents to $29.82 after saying it expects quarterly earnings to exceed forecasts as the benefits of a weaker dollar more than offset soft sales. Other multinational winners in the Dow included Boeing, up $1.47 to $44, and Procter & Gamble, up $2.35 to $93.90.
* European markets, which plunged during Friday’s early sell-off in the U.S., rebounded. Among major bourses, Germany climbed 4%, France gained 4.4% and Britain rose 2.7%.
Energy stocks rose with oil prices, which gained 15 cents to $26.09 a barrel in New York trading after a warning from Iraq that crude exports may stop because of U.N. delays in approving sale prices. ExxonMobil rose 88 cents to $40.03. The Philadelphia oil field services index added 2.8%.
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Market Roundup, C8-9
