Posted at 11:46 a.m., Tuesday, December 10, 2002
Search for bargains helps boost stocks
By Hope Yen
Still, volume was light, and the Federal Reserve's widely expected decision to leave short-term interest rates unchanged did little to encourage more buyers to enter the market. Analysts said many were avoiding commitments until they see more evidence the economy is back on track.
"Right now, the market is trying to regain its confidence," Robert Harrington, co-head of listed block trading at UBS Warburg. "The next step people would like to see is some signs that growth is returning as opposed to just stabilizing."
The Dow Jones industrial average rose 100.85, or 1.2 percent, to close at 8,574.26, according to preliminary calculations. Prior to today, blue chip stocks dropped 458 points over seven sessions.
The broader market also finished higher. The Nasdaq composite index climbed 23.57, or 1.7 percent, to 1,390.71. The Standard & Poor's 500 index gained 12.41, or 1.4 percent, to 904.41.
The Fed, in its statement, said currently low rates are "providing important ongoing support to economic activity."
The "limited number of incoming economic indicators since the November meeting, taken together, are not inconsistent with the economy working its way through its current soft spot," it added.
Jack Caffrey, equities strategist at J.P. Morgan Private Bank, said the comments fell in line with what most investors anticipated.
"Investors were expecting the Fed to be consistent with its last commentary that the economy is experiencing a period of stress, and the Fed believes the actions to date will be sufficient," he said.
Investors also welcomed President Bush's choice of investment banker William H. Donaldson to head the Securities and Exchange Commission, replacing Harvey Pitt, who resigned under pressure. Donaldson's nomination must be confirmed by the Senate.
Hugh Johnson, chief investment officer at First Albany Corp., said Wall Street preferred someone like Donaldson, a co-founder of the investment banking firm Donaldson, Lufkin & Jenrette, who served as chairman of the New York Stock Exchange from 1990 to 1995.
"He has extensive experience, he's well-known, and he's highly regarded," Johnson said.
Analysts say Wall Street's recent declines aren't surprising given the market's two-month rally.