Posted at 1:07 p.m., Thursday, March 13, 2003
Wall Street celebrates as Dow climbs by 270
By Amy Baldwin
The Standard & Poor's 500 index scored its the second best day of 2003. Still, the rally was also an expected rebound following weeks of selling.
Optimism about the outcome of a military conflict allowed investors to shrug off a discouraging retail sales report. Trading volume was the healthiest it has been all year.
"There is the expectation that Iraq will be resolved soon and the price of oil will come down and the outlook for the economy will improve and stock prices will rise. A lot of active investors are positioning themselves for that outcome. This (rally) reflects optimism that Iraq will be put behind us," said Hugh Johnson, chief investment officer for First Albany Corp.
Analysts said Wall Street was encouraged by a CNN report that said the Iraqi army was expected to surrender soon after the United States begins military action.
"The global consensus about the outcome of war with Iraq has become more positive, said Kevin Caron, market strategist at Ryan, Beck & Co., LLC. "The suspicion is that any engagement with Iraq may go better than expected."
The Dow closed up 269.68, or 3.6 percent, at 7,821.75, according to preliminary calculations. It was the Dow's biggest one-day win in five months, or since Oct. 11 when the blue chip average rose 316.34 to close at 7,850.29.
The broader market also spiked sharply higher. The Nasdaq composite index rose 61.54, or 4.8 percent, to 1,340.78. It was also the Nasdaq's best one-day gain in five months, or since Oct. 15 when it gained 61.91 to close at 1,282.44.
The S&P climbed 27.71, or 3.5 percent, to 831.90. The S&P's gain its second best of the year, falling behind the 29.21-point advance made on Jan. 2.
"This is a statement about the war. The reason I say that is it is not just that the stock market is going up, it is that the traditional safe havens are not performing well. Treasuries are going down and gold is going down," Johnson said.
But analysts are still dubious of stocks' ability to sustain a true advance until there is more clarity about a war.
"It has enough juice in it today that the sellers have actually gone to the sidelines," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis. But "if you are trying to figure out what the next chess move is, you can't."
The market looked past a weaker-than-expected retail sales report for February. The Commerce Department reported sales last month fell by 1.6 percent, the worst showing in 15 months as war jitters and snow storms kept shoppers away. Economists were expecting sales to fall by 0.5 percent.
But retailing stocks managed to trade higher on more positive news. Urban Outfitters climbed $3.82 to $22.22 after reporting fourth-quarter earnings that exceeded analysts' expectations by 4 cents a share.
Athletic shoe retailer The Finish Line rose 64 cents to $14.64 after Merrill Lynch raised its recommendation on the stock to "buy."
Brokerage house upgrades lifted other individual stocks. Deere advanced $1.17 to $39.13 after Lehman Brothers raised its rating to "overweight."
Shell Transport rose $1.36 to $34.16 and Royal Dutch gained $1.24 to trade at $38.77 after Prudential raised its recommendation on the oil companies to "buy." Oil stocks were also getting a lift from investors looking for oil prices to start falling once the Iraq situation is resolved.
Advancing issues outnumbered decliners more than 3 to 1 on the New York Stock Exchange.