Tide of war buoys Wall Street
By Hope Yen
NEW YORK Wall Street stocks shot higher as U.S.-led forces closed in on Baghdad yesterday, raising investor optimism that the two-week-old war with Iraq might soon end.
At the New York Stock Exchange, trader Anthony Denaro tracks advancing stocks as news developments from the Iraqi front increased investor optimism that the two-week-old war might end soon.
"The march to Baghdad is really driving the markets higher," said Chris Wolfe, equity market strategist for J.P. Morgan Private Bank. "This (market) move emphasizes that we have a lot of cash on the sidelines ready to be put to work."
"As we hear more rumors of Saddam being dead, that will come to permeate into investors' thinking, bringing them closer to the thought that this is a war that is shorter in nature."
The Dow advanced 215.20 points, closing at 8,285.06, having gained 77 points Tuesday to snap a four-day losing streak. It was the largest advance since March 21, when the blue-chip stocks closed 235 points higher.
The broader measures of the market, meanwhile, posted their sharpest gains since March 17. Nasdaq's composite index climbed 48.42, or 3.6 percent, to 1,396.72. The Standard & Poor's 500 index rose 22.42, or 2.6 percent, to 880.90.
Stocks had been in a decline because of worries that a prolonged war could hurt the economy's fragile recovery. But analysts have said Wall Street could quickly see gains should there be any signs of an immediate resolution.
"We were already a little bit oversold," said Todd Leone, trader at SG Cowen Securities.
Leone said the rescue of Army Pfc. Jessica Lynch from captivity in Iraq indicated to the American public that "what's going on over there is much better, so investors are getting optimistic again."
Wolfe said the market's recent declines represented a moderate pullback after the Dow notched a weekly gain of 8.4 percent two weeks ago, its best showing in two decades. He believes stocks should trade flat to higher until the government's employment report is released tomorrow.
"Our sense is that there really is little in the next few days that will really dismantle the strength of the move here," Wolfe said. "The employment report will give us a clue as to how things are going."
Investors shrugged off a Commerce Department report yesterday showing U.S. factory orders declining by 1.5 percent in February, the largest drop in five months. The reading came after orders went up 1.7 percent in January; it also was worse than analysts' estimates.
Biogen climbed $3.70 to $33.99 after the biotech company raised its first-quarter earnings outlook, citing strong interest in its psoriasis drug. Other tech shares advanced, including Dow components Intel, which rose $1.10 to $17.52, and Microsoft, which increased $1.37 to $25.72.
Circuit City Stores gained 13 cents, to $5.27, after reporting lower quarterly earnings that were in line with analysts' expectations.
Airline shares advanced on the proposed federal bailout package, although a congressional leader said the Bush administration may oppose it. American Airlines surged $1.25, or 41.7 percent, to $4.25, while Continental increased 37 cents to $5.95 and Delta climbed 89 cents to $9.69.
But Northwest Airlines closed unchanged at $6.70 after Credit Suisse First Boston downgraded the company's stock to "neutral" from "outperform," citing concerns about dampened international travel because of the mysterious respiratory disease being spread in Asia.
National Instruments fell $4.72 to $30.28 after it lowered its first-quarter outlook.
Advancing issues outnumbered decliners 3 to 1 on the New York Stock Exchange. Consolidated volume was heavy at 2.02 billion shares, compared with 1.80 billion traded Tuesday.