Posted at 11:26 a.m., Wednesday, September 4, 2002
Stocks rebound, but markets remain shaky
By Amy Baldwin
Wall Street fought hard for its advance, which accelerated in the last hour of trading.
Market observers are dubious of the market's ability to sustain a rally anytime soon as investors are focused on the anniversary of the terrorist attacks as well as a spate of corporate profit warnings expected as the end of the third quarter approaches later this month.
"You've got three things the earnings warnings season, Sept. 11, and historically September is the worst month (for stocks)," said Christopher Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati.
Prudential Securities market commentator Bryan Piskorowski said, "That is a lot of headwind for the market to be facing."
The Dow ended a five-day losing streak, closing up 117.07, or 1.4 percent, to 8,425.12. The Dow recouped some of the 610 points it gave up in the previous five days 355 of which were lost yesterday.
The broader market was also higher. The Standard & Poor's 500 index rose 15.38, or 1.8 percent, to 893.40, having lost 69 points in the past five days.
The Nasdaq composite index rose 28.47, or 2.3 percent, to 1,292.31, having fallen 51.01 Tuesday and having traded lower in four of the previous five sessions.
But analysts attributed the advances to technical factors rather than turnaround in investor sentiment or improved business fundamentals. Stocks were expected to bounce back after a string of sell-offs.
And, short covering was also a factor, analysts said. In short-covering, investors who sold stock figuring the market was going to keep falling are forced to buy shares to cover their bets when the market turns higher.
Analysts expect trading to be choppy throughout September as investors await third-quarter earnings and signals that the economy is strengthening, not slipping back into recession.
"People are skeptical about earnings and we've seen mixed signals in the economy," said Mike Kayes, chief investment officer at Eastover Capital in Charlotte, N.C.
Among today's winners, DaimlerChrysler climbed $1.65 to $41.52 and General Motors rose 20 cents to $45.75 after each reported that car sales were higher in August compared with last year.
Beazer Homes surged $3.18 to $63.26 on news that August home sales were higher than last year.
Intel rose 25 cents to $16.11 ahead of its mid-quarter update due out Thursday.
Losers included Philip Morris, which fell $1.71 to $47.80, after CEO Michael E. Szymanczyk said the tobacco giant is facing increased competition from deep-discount cigarettes.
A Commerce Department report saying construction spending remained flat in July had little effect on trading.
Advancing issues outnumbered decliners slightly more than 2 to 1 on the New York Stock Exchange. Volume was light at 1.34 billion shares, but ahead of Tuesday's 1.30 billion.
The Russell 2000 index, which follows smaller company stocks, rose 10.62, or 2.8 percent, to 389.75.