Investor doubts stall Dow advance
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By Lisa Singhania
Associated Press
NEW YORK — Wall Street extended its advance today with a moderate rally that boosted technology stocks but failed to take the Dow Jones industrials above 10,000.
Analysts attributed the Dow's stall to investors' doubts that the stock market might be rising too much, too quickly. The index has been flirting with the 10,000 level and bull market territory for a week now. A report from the National Bureau of Economic Research confirming that the United States is in a recession added to the debate.
"There's a tug of war between the bears and the bulls here," said Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray. "I think the market is in pretty good shape. The problem, I think, though, is that many investors are having a hard time diagnosing when earnings will start to turn positive. And we don't see positive earnings, positive growth until the latter half of 2002."
The Dow closed up 23.04, or 0.2 percent, at 9,982.75, according to preliminary calculations, rebounding from a deficit of 55 points earlier in the session. Although the Dow briefly crossed the 10,000 mark last week, it has not closed above that level since Sept. 5, six days before the terrorist attacks.
Broader stock indicators also advanced. The technology-laden Nasdaq composite index was up 38.03, or 2.0 percent, at 1,941.23, while the Standard & Poor's 500 index rose 7.08, or 0.6 percent, to 1,157.42.
The Dow is now more than 21 percent above the 2001 low set Sept. 21 after the terror attacks. A bull market technically is defined as a 20 percent or greater recovery from a low.
But analysts warn against confusing a rebound with a rally. They note that much of stocks' recent gains have come as the market makes up the precipitous losses that followed the terrorist attacks. Investors also have shown limited faith in the gains, selling stocks periodically to lock in profits for fear the run-up won't continue.
Also, economic data remains mixed and unemployment continues to be a problem. The National Bureau of Economic Research confirmed today what a lot of people have suspected — that the United States entered a recession in March.
"The Dow passing back over 10,000 will generate a headline or two and that should stir some enthusiasm among individual investors. Whether it's sustainable or not will depend more on underlying fundamentals: Is this economy bottoming out and about to recover? Are profits about to bottom out and recover?" said Charles G. Crane, strategist for Victory SBSF Capital Management. "We won't know those answers for sure for a while."
In trading today, online retailers led the market higher on stronger-than-expected holiday business. Yahoo! advanced $2.34, or 15 percent, to $18.07 after the portal reported Thanksgiving weekend sales rose more than 75 percent from the same period a year ago. Amazon.com rose $3.13, or 34 percent, to $12.21 on hopes its holiday performance would also stand out.
Other tech stocks were strong, too. Intel rose 81 cents to $31.87 on word of new technological breakthroughs that will help microprocessors use less power and operate more efficiently.
Energy stocks were weaker, as investors watched to see whether Russia would reduce its oil production further to help stabilize world oil prices. ExxonMobil dropped 67 cents to $37.77.
Advancing issues narrowly led decliners on the New York Stock Exchange. Volume came to 1.08 billion shares. Total trading volume Friday was 273.24 million shares since the market closed early because of the Thanksgiving holiday.
The Russell 2000 index gained 2.80 to 461.22.
