Posted at 12:11 p.m., Monday, January 28, 2002

Late bargain hunting boosts stock market

Associated Press

NEW YORK — A burst of last-minute bargain hunting gave the stock market a modest gain today, but lingering doubts about the timing of a business recovery limited a broader rally.

Analysts said the market was waiting for the two-day meeting of the Federal Reserve's Open Market Committee, which begins tomorrow.

Although the committee is not expected to reduce interest rates, traders want to see what predictions the Fed makes about an economic turnaround.

The Dow Jones industrial average closed up 25.67, or 0.3 percent, at 9,865.75, according to preliminary calculations, recovering from a drop of as much as 41 points.

The broader market was mixed. The technology-dominated Nasdaq composite index rose 6.22, or 0.3 percent, to 1,943.92, while the Standard & Poor's 500 index slipped 0.22, nearly unchanged, to 1,133.06.

While Fed chairman Alan Greenspan indicated last week the economy appears to be strengthening, traders will be closely reading the Fed's statement on the economy that's expected to follow the meeting on Wednesday. Even in the absence of a rate cut, investors hope the Fed will be able to provide more concrete information about when a recovery will come, and which sectors will turn around first.

Prices reversed direction several times during today's session, continuing the market's meandering trend that has been in place for much of January. A string of murky corporate forecasts have given investors little sense of when business will improve, and therefore little reason to buy.

"We've had two down years on the market, so people really wanted to see the market turn around this month, but that just isn't happening yet because the news isn't strong enough," said Matt Brown, head of equity management at Wilmington Trust. "CEOs have yet to say their business have hit bottom and that business will start to pick up throughout the rest of the year."

Analysts say that until corporations start saying business has stabilized and profits should start strengthening soon, the market will continue to fluctuate.

With fourth-quarter earnings season ending, most companies have instead been more cautious and said they need more time before making any such predictions. As a result, investors have curbed their buying.

In trading today, American Express stumbled 70 cents to $36.29 ahead of earnings due after the market closed, while General Electric declined 11 cents to $38.15.

But investors bid General Motors up $1.86, or 3.8 percent, to $50.34 after Morgan Stanley upgraded the automaker to "outperform" from "neutral."

Technology stocks were also mixed. IBM fell $1.13 to $108.15, while Cisco Systems advanced 57 cents to $19.70 and Texas Instruments, due to report earnings later in the day, was up 95 cents, or 3.5 percent, at $28.40.

Also today, the Commerce Department reported new home sales rose 5.7 percent in December. The gain was helped by the Federal Reserve's 11 interest rate cuts in 2001, which made it cheaper to borrow money.

"The figures are a bit backward looking since we're already almost into February but it does indicate that despite all that's transpired in the last six months, consumers respond to deals," said Charles G. Crane, strategist for Victory SBSF Capital Management. "In this case here, the deal was some of the lowest mortgage rates in a generation."

Advancing issues narrowly edged out decliners on the New York Stock Exchange where volume came to 1.17 billion shares.

The Russell 2000 index rose 1.93 to 481.28.

Japan's Nikkei stock average rose 0.8 percent. In Europe, Germany's DAX index advanced 0.05 percent, Britain's FT-SE 100 rose 0.6 percent, and France's CAC-40 climbed 1.3 percent.