Rally of Last 2 Weeks Continues

From Times Staff and Wire Reports

Stocks climbed Monday after an early drop, driving key indexes higher for the seventh time in the last eight sessions as Wall Street’s dramatic turnaround of the last two weeks continued.

Despite soft economic data, investors are showing newfound “euphoria,” money manager Brian Bruce of PanAgora Asset Management in Boston told the Associated Press. “People have been waiting for something to be enthusiastic about. [Monday] is an example of people wanting to see the glass half full.”

The 30-stock Dow Jones industrial average rallied 215.84 points, or 2.6%, to 8,538.24, bringing its gain to more than 17% since it hit a five-year low Oct. 9.

The broader Standard & Poor’s 500 index jumped 15.33 points, or 1.7%, to 899.72, and the tech-loaded Nasdaq composite climbed 21.81 points, or 1.7%, to 1,309.67.


Winners outnumbered losers by about 3 to 2 on Nasdaq and the New York Stock Exchange amid moderate volume.

Treasury yields soared as investors continued to shift money out of fixed-income securities and focused on equities.

The yield on the benchmark 10-year Treasury note rocketed to 4.25%, from 4.11% on Friday. The 10-year T-note yield fell to a generational low of 3.57% on Oct. 9.

The recent stock rally has pushed major market gauges to their highest closes since Sept. 11. The three major market gauges wrapped up two straight weeks of gains Friday on the heels of six successive down weeks.


Skeptical analysts said it remains to be seen whether this move is another sharp rally within the bear market of the last 2 1/2 years or whether stocks might have reached lasting lows earlier this month.

“We have seen a bottom that the market is probably going to test a little bit,” strategist Laszlo Birinyi of Deutsche Bank told Bloomberg News. “I don’t think it’s up, up and away.”

The market slumped early in the day after an indicator of U.S. economic activity fell in September for the fourth month in a row. The Conference Board said the index of leading economic indicators fell 0.2% last month.

Cautious comments from software giant Microsoft also tempered investor enthusiasm and limited gains in the tech sector. Microsoft eased 64 cents to $52.51 after a top executive said a surge in fiscal first-quarter sales was not sustainable and forecast tough business conditions ahead.


So far, 61% of companies in the S&P; 500 have beaten earnings forecasts for the last quarter -- although many previously had guided analysts downward, and many have issued cautious guidance going forward.

Investors still shrugged off the economic news and other concerns.

Some analysts said investor sentiment perked up as worry about a U.S. war with Iraq eased. Oil prices plunged on signs the U.S. was ready to compromise on a United Nations resolution on Iraq, cooling fears of an imminent strike on Baghdad.

Philip Morris and Coca-Cola helped lead the advance after Wall Street analysts recommended their shares. Philip Morris gained $2.45 to $42.49 after Salomon Smith Barney said the company may introduce a discount brand of cigarettes to fend off low-price competition. Coke climbed $1.61 to $48 after Thomas Weisel Partners upgraded the shares.


In other highlights:

* Major drug shares declined after President Bush proposed regulations aimed at bringing lower-cost generic drugs to market faster. Pfizer slid $1.34 to $32.15 and Bristol-Myers Squibb dropped 44 cents to $23.45.

* Manufacturer 3M rose $3.69 to $129 after reporting quarterly earnings surged 38%, driven by cost cutting and strong sales in Asia. The company also warned that the global economy still looks sluggish.

* Johnson & Johnson climbed $1.76 to $61.11 after an arbitrator rejected a bid by Amgen to bar Johnson & Johnson from selling its Procrit anemia drug in the U.S. Amgen slipped 10 cents to $50.38.


* Advanced Micro Devices surged $1.15 to $5.55 after Barron’s said sales of a new server chip scheduled to ship next year may allow the share price to quadruple. Intel, the biggest maker of computer microprocessors, added 99 cents to $15.45.

* Allegheny Energy jumped $1.30 to $6.20, leading a surge in energy shares, after the utility owner won Securities and Exchange Commission approval to seek $2 billion in secured loans.

* SureBeam gained 34 cents to $3.85 after the San Diego-based maker of irradiation technology said the government approved such treatment for imported fruits and vegetables.

Market Roundup, C9-10