Late Rally Lifts Stocks Despite Investors’ Jitters
Stocks recovered from early selling Monday to post modest gains. But continued light trading volume suggested that investors remain skittish amid economic and geopolitical uncertainty and concerns about the upcoming first anniversary of the terrorist attacks.
The Dow Jones industrial average rose 92.18 points, or 1.1%, to 8,519.38 after falling almost 112 points in early trading. Broader indicators also closed higher. The Nasdaq composite index rose 9.30 points, or 0.7%, to 1,304.60. The Standard & Poor’s 500 index was up 9.04 points, or 1%, at 902.96.
The rally added to Friday’s gains and marked the first back-to-back advances for the major indexes in more than two weeks. But the overall market was mixed: Almost four stocks rose for every three that fell on the New York Stock Exchange, but losers edged winners on Nasdaq.
Trading volume was light, continuing the trend of recent weeks and leading analysts to question whether Monday’s rise was an indication of renewed market strength. Investors, they said, remain wary about Wednesday’s anniversary of the terror attacks as well as a possible war with Iraq.
“People are jittery in front of the anniversary, worrying something may be brewing,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “Then there’s the saber rattling over Iraq. That keeps buyers away from the market.”
One sign of the jitters: Shares of gold mining firms rose as gold prices soared to seven-week highs. The safe-haven asset gained $1.40 to $321.30 an ounce in New York, its highest price since July 22.
The Philadelphia Stock Exchange index of 11 gold and silver stocks rose 4% on gains by firms such as AngloGold, up $1.89 at $27.09, and Harmony Gold, up $1.35 at $17.66.
Defense stocks also rallied, paced by Alliant Techsystems, up $2.36 to $71.19, and Lockheed Martin, up $1.85 to $66.52.
Economic news helped lift stocks out of their early doldrums.
The government reported that U.S. wholesalers in July built up their inventories at the fastest rate in 20 months, suggesting that businesses are stockpiling products to keep up with increased demand.
The report pushed bond yields higher for a second day as expectations of further interest rate cuts by the Federal Reserve receded. The yield on the benchmark 10-year Treasury note rose to 4.06% from Friday’s close of 4.01%.
More good news came after the close when auto maker Ford Motor said it would make a small profit in the third quarter instead of the loss it forecast earlier. Its shares rose to $11.04 in after-hours trading after ending the regular session up 60 cents to $10.80.
The dollar gained against the euro and the yen for a fourth day on speculation that the U.S. economic recovery will outpace that of Europe and Japan.
In other highlights Monday:
* J.P. Morgan Chase, the most active issue on the NYSE, lost 32 cents to $23.59 but was off its earlier low of $22.08. The Dow component lost ground after Merrill Lynch cut its rating on the stock to “neutral” from “buy,” citing lower earnings estimates and a possible dividend cut.
* Intel slid 14 cents to $16.08. The chip maker jumped more than 7% on Friday after trimming its quarterly revenue forecast but not by as much as feared. Microsoft rose 88 cents to $48.70 after slipping to $46.63 in the early going.
* Citigroup added 79 cents to $31.07. The company said it was removing the head of its Salomon Smith Barney corporate and investment banking unit, as the company faces investigations into the integrity of its stock picks and its role in the collapses of Enron and WorldCom.
* Nextel Communications rose early after it said it expected to meet or beat its subscriber growth estimates for the year. But the stock, the most actively traded issue on Nasdaq, finished down 9 cents at $7.89.
LendingTree rose $1.90 to $15.85. The online lending exchange said it expected to post a profit in the third quarter instead of the previously expected loss, citing strength in its mortgage refinancing and home equity products.
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Market Roundup, C8-9
