Dow enjoys first 4-day win streak in months
By Amy Baldwin
Associated Press
NEW YORK — Investors, feeling more confident after the market's huge three-day rally, refrained from making major moves yesterday, allowing the three major stock indexes to all end the week higher for the first time in three months.
Associated Press
The Dow industrials scored 700 points in their first four-day winning streak in nearly seven months.
Traders study the monitors at the New York Stock Exchange shortly before the closing bell Thursday. Wall Street reveled in stunning gains again Thursday as the Dow Jones industrials surged more than 250 points. Yesterday, stocks remained upbeat.
Technology enjoyed a strong weekly advance, but was pulled lower yesterday in large part by a downgrade in the storage sector.
"There are a number of issues that are giving investors a little more confidence about putting their money to work in stocks," said Charles Crane, strategist for Victory SBSF Capital Management. "I think there is a realization that earnings, while maybe not on a rocket ship trajectory, are trending up."
The Dow closed up 33.43, 0.4 percent, at 8,745.45, according to preliminary calculations.
Combined with triple-digit surges Tuesday through Thursday, the Dow has climbed 701.82 in four sessions. The Dow hasn't had four consecutive gains since the four sessions that ended Jan. 28, yielding a 90-point advance.
Still, while Wall Street's recent string of triple-digit rallies and a rare week of solid gains might give some investors hope that the bear market is ending, there are still plenty of reasons to be skeptical, including the fact that the number of companies issuing pessimistic forecasts for the current quarter is growing.
"We've been in a trend the last several quarters where the ratio of negative to positive (outlooks) had been declining, but now that's popped back up," said Chuck Hill, director of research at Thomson First Call.
Thomson First Call counted 557 earnings alerts for the current quarter, as of Aug. 8, the most recent data available. Of those, 308 have been below analysts' expectations, 110 in line with forecasts and 139 above estimates. Negative forecasts outnumber positive ones more than 2 to 1.
Although that ratio is still an improvement from what it was for most of 2001, it represents a retreat for this year.
Three months ago, at the same point in the second quarter of this year, there was roughly one negative pre-announcement for every positive one. Six months ago, at the same point in the first quarter, the ratio was just under 2 to 1.
The current quarter won't end for most companies for another six weeks, but Hill expects the negative tone to continue.
"I don't see it going back down to the kind numbers we had in the second quarter or the first quarter," Hill said.
The broader market was mixed yesterday. The Standard & Poor's 500 index rose 3.18, or 0.4 percent, to 908.64, following a three-day advance of 70.86. The Nasdaq composite index fell 10.40, or 0.8 percent, to 1,306.12, following a three-day gain of 110.51.
All three indexes ended the week higher for the first time in three months, or since the week that ended May 17. For the week, the Dow gained 5.2 percent, the S&P advanced 5.1 percent, and the Nasdaq rose 4.7 percent.
"As simple and basic as it sounds, the market has some positive momentum. It always swings on emotion," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis.
The market's recent strength comes as investors are increasingly confident that the Federal Reserve will cut interest rates, either at next week's meeting or in September, to keep the economy from falling back into recession.
An economic report yesterday gave the market another reason to expect a rate cut. The Labor Department reported that productivity grew at its slowest pace in a year, rising at an annual rate of 1.1 percent in the second quarter. Economists' expectations ranged from growth rate of 0.5 to 1.5 percent.
Analysts said investors are also feeling more in the mood to buy stocks as the Aug. 14 deadline approaches for the nation's largest companies to certify their financial results.
"We are at a point where the number of negatives out there, and there are still many, are at least neutralized by a growing number of positives," Crane said.
Advancing issues narrowly outnumbered decliners nearly 3 to 2 on the New York Stock Exchange, where volume (a consolidated 1,558,471,370) was light.
The Russell 2000 index, which tracks smaller company stocks, fell 1.39, or 0.4 percent, to 388.45.
Overseas, France's CAC-40 rose 1.8 percent, Britain's FTSE 100 gained 1.9 percent, and Germany's DAX index climbed 2.2 percent.
