Stocks Bounce Back on Bargain Hunting
U.S. stocks rebounded Tuesday amid strong earnings from retailers and bargain hunting after Monday’s slump.
Most foreign markets wobbled back after a severe sell-off in the previous session. India’s Sensex index jumped 8.3% after a record 11.1% dive on Monday, as Italian-born Sonia Gandhi declined the prime minister’s post, calming fears that she might slow economic reforms.
Key indexes in Japan, South Korea, Brazil, Turkey and most of Europe also notched gains.
On Wall Street, the Dow Jones industrial average rose 61.60 points, or 0.6%, to 9,968.51, after falling nearly 106 points to a five-month low Monday.
Broader market indicators were moderately higher. The Standard & Poor’s 500 index added 7.39 points, or 0.7%, to 1,091.49, and the Nasdaq composite index was up 21.18 points, or 1.1%, at 1,897.82.
Advancers outnumbered decliners by about 5 to 2 on the New York Stock Exchange and by about 7 to 4 on Nasdaq in modest trading.
Markets worldwide were hammered Monday on concerns about ongoing turmoil in Iraq, record oil prices and rising U.S. interest rates.
But many analysts argue that the pullback of recent weeks is ignoring healthy fundamentals for the global economy and individual companies.
“The momentum is quite strong for corporate profits,” Randy Bateman, who oversees $10 billion as chief investment officer at Huntington Capital Corp. in Columbus, Ohio, told Bloomberg News. “There are a lot of things that will mitigate the negative aspects of interest-rate increases.”
Major retailers provided the latest evidence of hefty corporate earnings growth.
Dow component Home Depot jumped $1.15 to $34.62 after posting a 21% gain in quarterly profit. Other retailers rising on earnings reports included Staples, up $1.97 to $26.39, and J.C. Penney, up $2.11 to $33.71.
The market also was helped by President Bush’s plan to renominate Federal Reserve Chairman Alan Greenspan, allaying fears of abrupt change at the central bank, analysts said.
In the bond market, however, Treasury yields edged up after falling for two sessions. Yields rose to 22-month highs last week on expectations that the Fed would begin tightening credit this summer.
The 10-year T-note ended at 4.73%, up from 4.69% on Monday.
In commodities trading, oil prices dropped from record highs as support seemed to be gathering among members of the Organization of the Petroleum Exporting Countries to raise their cap on crude production, analysts said.
Near-term oil futures in New York lost $1.01 to $40.54 a barrel.
Among the day’s highlights:
* Many emerging markets stabilized. They have fallen much more sharply than Wall Street in recent weeks.
South Korea’s main index gained 1.8%, the Turkish market rose 1.3% and Brazil was up 2.4%.
* Semiconductor-related shares saw gains after Smith Barney analyst Glen Yeung said demand for chips would outstrip supply next year. Intel rose 40 cents to $27.24, Broadcom rallied 78 cents to $37.78 and KLA Tencor added $1.03 to $44.59.
* Hewlett-Packard reported strong earnings after the market closed. HP shares, which rose 33 cents to $19.83 during regular trading, added 92 cents to $20.75 after hours.
* Real estate investment trust shares continued to rally after plunging in April on interest-rate concerns. Mack Cali Realty rose $1 to $36.73, Public Storage gained $1.29 to $42.23 and Arden Realty jumped $1.27 to $28.37.
* Many bank stocks also rebounded. Comerica gained $1.17 to $53.87, Bank of America was up 98 cents to $80.85, Wells Fargo rose 94 cents to $57.85 and Cathay General surged $1.15 to $61.62.
* Gilead Sciences soared $4.94 to $62.54. Federal regulators said they would decide by Sept. 12 whether to approve the Foster City, Calif.-based company’s application to sell a two-drug treatment for HIV patients.
