Posted at 11:38 a.m., Thursday, September 26, 2002
Blue chip stocks pull Wall Street higher
By Brad Foss
The Dow closed up 155.30, or 2 percent, at 7,997.12, according to preliminary calculations. Yesterday, the blue chips rose 158.69, bringing their two-day gain to nearly 314 points.
The broader markets were mixed. The Nasdaq composite closed down 0.68, or 0.1 percent, to 1,221.61. The Standard & Poor's 500 index rose 15.29, or 1.8 percent, to 854.95.
Analysts had expected yesterday's rally to be short-lived because of investor concerns about third-quarter earnings, the financial impact of a potential war in Iraq and the brittle economic recovery.
But the Commerce Department reported today that orders to U.S. factories for durable goods such as cars and machinery fell by 0.6 percent in August. While the report confirmed sluggishness in the manufacturing sector, it beat the expectations of analysts, who forecast orders would fall by more than 2 percent.
Other government reports showed that sales of new homes climbed 996,000 in August, representing a record 1.9 percent increase from July, and that new claims for unemployment benefits fell by 24,000 to 406,000. Both of these reports beat analysts' expectations.
Moore said the fundamentals of the U.S. economy have not radically improved, but that stocks moved higher because markets had become oversold in recent weeks by investors worried about the fragile recovery and the possibility of a war.
"Usually when all the people who are looking at the problems have sold, it leaves markets available for a lift," he said.
Tech stocks rose in early trading, but gave up their gains mainly because of profit-taking, said Brian G. Belski, fundamental market strategist at US Bancorp Piper Jaffray.
He downplayed the impact of an announcement by Nortel lowering the telecommunications equipment maker's third-quarter revenue forecast, saying it wasn't a surprise.
"Investors right now are of the mindset to take potential profits when and if they can," Belski said.
Nortel dropped 7 cents to 57 cents. Rival Cisco was down 60 cents to $11.36.
Bed, Bath & Beyond rose 83 cents to $34.51 after the home-furnishings company reported higher second-quarter earnings.
Scotts Co. rose $1.44 to $43.95 after the garden products company said it expected income growth of 60 percent to 65 percent for the year.
The struggling airline sector received a boost after United Airlines' unions said they would allow the carrier to cut labor costs by $5 billion over the next five years a development in negotiations intended to keep the No. 2 airline out of bankruptcy court.
United parent UAL rose more than 33 percent, or 73 cents to $2.94, and American Airlines gained 66 cents to $4.86, a rise of nearly 16 percent.
Advancing issues outnumbered decliners by a 5 to 2 ratio on the NYSE. Volume came to 1.6 billion shares, compared with 1.64 billion traded at the same point yesterday.
The Russell 2000 index gained 5.55 points, or 1.5 percent, to 370.69.