Posted at 11:52 a.m., Wednesday, May 21, 2003
Investors unmoved by Greenspan's comments
By Amy Baldwin
In testimony before Congress, Greenspan said economic signals remain mixed; his comments increased investors' recent fears about the economic recovery and sent stocks falling. But prices recovered as investors decided to take advantage of lower prices following three days of selling.
Investors were also cautious after yesterday's reports of mad cow disease in Canada and by Washington raising the national terror alert level to "orange," indicating a high risk for attacks.
Shaking off an early loss of 60.15, the Dow Jones industrial average closed up 25.07, or 0.3 percent, at 8,516.43. It was the Dow's first gain in four sessions, wiping out only part of a three-day loss of 221.78 points.
The broader market was mostly higher. The Standard & Poor's 500 index rose 3.69, or 0.4 percent, to 923.42. But in its fourth straight decline, the Nasdaq composite index dipped 1.22, or 0.1 percent, to 1,489.87.
Investors had been collecting profits in recent sessions from the market's huge earnings-driven rally. They are concerned that stocks have become too pricey too soon.
Still, analysts are encouraged by signs of resilience in the market, including how most of Wall Street reversed earlier declines today. Selling also has been moderate aside from Monday's 185-point drop in the Dow. Yesterday, amid upsetting news about mad cow disease and a greater risk of terrorism, stock indexes posted extremely small losses, and more stocks rose than fell on the New York Stock Exchange.
"The strength in the market is still there. We are looking at a market that still wants to go higher," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.
Meanwhile, other Wall Street observers predict the market will have trouble rallying further until there are new signs that the economy is rebounding and stocks are fairly priced.
"Lacking any clear evidence of a market bottom, any near term rally is likely to be, in our opinion, short-lived," said Richard A. Dickson, senior market strategist, at Lowry's Research Reports in Palm Beach, Fla., in a market report released today.
Among the market's winners, McDonald's rose 35 cents to $17.30, recouping some of the $1.21 it lost yesterday on fears of mad cow disease. Lehman Brothers also upgraded the company to "overweight" from "equal-weight," downplaying the severity of a situation in Canada, where officials said a cow was diagnosed with mad cow disease. Canadian officials said the animal, slaughtered Jan. 31, did not enter the food chain and its herd has been isolated for testing.
Hewlett-Packard rose 89 cents to $17.94, having reported earnings late yesterday that beat analysts' expectations by 2 cents a share and confirmed Wall Street's estimates for the rest of the year.
But Cisco Systems declined 29 cents to $15.70 after Deutsche Securities lowered its recommendation on the networker to "hold" from "buy."