Stocks Gain Despite Down News
Stocks staged a broad advance Wednesday, shaking off some downbeat economic news and another rise in oil prices.
A rally in technology stocks lifted the Nasdaq composite index 44.84 points, or 3.3%, to 1,419.35, the highest close since Aug. 22.
The Dow Jones industrial average gained 148.23 points, or 1.8%, to 8,623.01, though it remains below its recent closing high of 8,771.01 set Nov. 6.
A report Wednesday that housing starts plunged in October did not appear to trigger serious concerns about the economy, even though it followed a warning Tuesday from Home Depot that it will miss sales growth targets this year.
Some analysts said institutional investors were taking their cues less from the news than from the calendar. The stock market has entered what has historically been its strongest period of the year: November through January.
“We are in the season when stocks do better ... when people become more optimistic about the coming year and they become more aggressive in buying stocks,” said Bill Barker, strategist at brokerage RBC Dain Rauscher in Dallas.
Major indexes hit five-year lows in early October, resurged through early November and have since been trading largely in a sideways pattern.
The rebound from the October lows has whetted the appetites of fund managers who are eager to erase some of the steep losses they have suffered this year, analysts said.
Nasdaq has surged 27.4% since bottoming on Oct. 9, though it remains down 27.2% year to date. The Dow is up 18.3% from its low. And the Standard & Poor’s 500 -- which on Wednesday rose 17.41 points, or 1.9%, to 914.15 -- is up 17.7% from its low.
Winners topped losers by more than 2 to 1 on the New York Stock Exchange and on Nasdaq, as trading volume rose.
“Clearly, the psychology of the marketplace is positive. And people are concerned about getting left behind right now,” said Brian Bush, head of equity research at Stephens Inc.
Near-term oil futures gained 56 cents to $26.98 a barrel Wednesday, a three-week high, after President Bush again warned Iraq that it would face “the severest of consequences” if it failed to comply with United Nations weapon inspections.
In the bond market, Treasury yields rose as some investors turned to higher-yielding corporate issues. The 10-year T-note yield rose to 4.06% from 3.98% Tuesday.
Recent reports on consumer confidence and retail sales are “pointing to a gradual recovery,” which is good for the corporate bond market, Michael Kastner, who manages $10 billion in bonds at Deutsche Bank Private Banking, told Bloomberg News.
Yields on “junk” corporate bond issues -- those rated below investment grade -- have fallen sharply recently, reflecting more optimism about the economy. The yield on the KDP Investment Advisors index of 100 junk issues has dropped to 10.8% from 12.3% in mid-October.
In other highlights of the day:
* Semiconductor stocks were boosted by Analog Devices’ report that its sales rose for the first time in six quarters. Analog jumped $1.81 to $29.81.
Among other chip makers, Intel rose $1 to $19.15 and Texas Instruments gained $1.24 to $18.42. Semiconductor manufacturing equipment maker KLA Tencor surged $3.03 to $39.82.
* Financial stocks were strong. Merrill Lynch jumped $2 to $41, Citigroup gained $1.35 to $37.79 and XL Capital advanced $2.48 to $80.15.
* Housing stocks rallied despite the news on October new-home starts. KB Home added 65 cents to $43.54, Pulte Homes jumped $1.35 to $44.80 and Lennar gained $1.33 to $52.45.
Also, Maytag jumped $2.61 to $27.40 after reiterating its 2003 earnings estimate of $3.10 to $3.20 a share.
* Phelps Dodge slumped $2.18 to $26.72. The mining firm said it was contacted as part of an investigation by U.S. and European regulators into possible price fixing in the carbon-black market. Carbon black is used in inks and tires.
Market Roundup, C5-6
