Updated at 12:35 p.m., Monday, September 24, 2001
Dow up 360 points, but market remains uncertain
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Associated Press
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NEW YORK — Stocks surged higher today, carrying the Dow Jones industrials up more than 360 points, as bargain hunters helped Wall Street rebound from one of its worst weeks ever. But the market remained extremely nervous, and no one was betting that the gains would hold.
Despite today's big advance, investors will be wary of making any major moves until it's clearer how the government will retaliate for the Sept. 11 terrorist attacks, analysts said. The market is also trying to determine how much and for how long the economy will suffer.
The first economic impacts of the attacks have already been felt as companies warned of weaker profits and laid off thousands of workers as they expect consumers to spend and borrow less and take fewer vacations.
The Dow closed today up 368.05, or 4.5 percent, at 8,603.86, recovering more than a quarter of the 1,369.70 it lost last week in its biggest-ever weekly decline. The Dow was up as much as 413.51 in the last hour today before giving back some of its surge, which was still large enough to be the blue chips' fifth largest daily point gain.
Like the Dow, the market's broader indicators bounced back after falling sharply last week, the first week of trading following the attacks, to their lowest levels in three years.
The Nasdaq composite index rose 76.21, or 5.4 percent, to 1,499.40, while the Standard & Poor's 500 index advanced 37.65, or 3.9 percent, to 1,003.45.
Today's rebound didn't mean the market has overcome its uncertainty — it was more the result of investors deciding to take some chances on stocks at discounted prices, analysts said.
"At the pace of decline of last week, we were between five and six weeks before the Dow 30 being worth zero. And, that doesn't make sense at all," said Bob Stovall, market strategist at Prudential Securities.
Analysts also said prices will continue to fluctuate in the near term as investors ponder how much risk they are willing to take amid the political and economic uncertainty. Prices are expected to follow investors' emotions as they did last week.
"Last week, there was kind of a panicky aspect, a throwing in of the towel. I think there is a realization that the lower prices have taken into account a lot of the bad stuff," said Charles Pradilla, chief investment strategist at SG Cowen. "That is not to say that there won't be more pain ... We will continue to vacillate around."
Pradilla and other analysts also believe the market could stumble tomorrow when consumer confidence data is released by the New York-based Conference Board. While confidence was already waning before the attacks, it was likely that Americans grew even more uneasy afterward.
While the market anticipates consumer confidence for the month of September to be quite low, it's more worried about how much further it will sink in the wake of the attacks. As the market has declined sharply in the last year and a half, investors have taken some solace from the fact that consumer spending remained relatively strong.
Today's gainers were spread across nearly all market sectors, an indication that cheaper prices lured buyers rather than lessening fears about how the United States will retaliate for the attacks and how long the economy will suffer.
Among the Wall Street's winners, 3M soared $4.69 to $91.67, Citigroup climbed $2.64 to $39, and Wal-Mart advanced $2.62 to $47.28. Insurer American International Group, which expects its pretax losses from the attack to total $500 million, rose $3.95 to $71, recouping some heavy losses from last week.
Airline stocks, which fell sharply because hijacked commercial planes were used in the attacks, rose on a $15 billion government aid package announced over the weekend. The sector was one of the weakest last week as major U.S. airlines reduced flight schedules, and laid off thousands of workers.
UAL, the parent of United Airlines, rose 93 cents to $18.06, while Delta gained $1.52 to $23.99.
Another sign that today's buying was more technical than fundamental could be seen in stocks that rose despite investment firms' downgrades, which typically pressure shares.
Dell Computer rose $1.97 to $18.60, while Microsoft advanced $2.30 to $52.01, although Salomon Smith Barney reduced its earnings estimates and price targets on the companies. Cisco Systems rose 47 cents to $12.56 despite ABN Amro reducing its target price on the networking stock.
Advancing issues outnumbered decliners nearly 3 to 1 on the New York Stock Exchange where trading volume was heavy but still lighter than Friday. Consolidated volume came to 2.06 billion shares, compared with 2.67 billion shares on Friday.
The Russell 2000 index, the barometer of smaller company stocks, rose 14.90 to 393.79.
Wall Street also drew some support from overseas markets. London's FT-SE 100 index finished up 4.1 percent, France's CAC-40 closed with a gain of 5.7 percent, and Frankfurt's DAX index rose 6.6 percent. Japanese markets were closed for a holiday.
