Boost in economy propels Wall Street
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By Meg Richards
Associated Press
NEW YORK — A solid reading on the economy gave investors some badly needed reassurance today, propelling the Dow Jones industrials up 170 points and the Nasdaq composite index up 3 percent. But analysts were divided over whether the rally signaled an end to Wall Street's correction or was simply fueled by bargain-hunting.
The market has been in a corrective phase for about nine weeks, weighed down by a number of factors, from concerns over high stock valuations to fears about global terrorism. While it was not clear whether Wall Street would sustain the advance, the worst is probably over, said Alfred E. Goldman, chief market strategist with A.G. Edwards Inc. in St. Louis.
"We think the correction has probably done its dastardly deed and the primary trend remains up," Goldman said. "The outlook for the economy remains positive, the forecasts for corporate earnings are up. ... I would advise people who are on the sidelines to do some selective buying."
According to preliminary calculations, the Dow rose 170.59, or 1.7 percent, to 10,218.82, after declining more than 250 points over the last five sessions.
The broader gauges were also markedly higher. The Nasdaq soared 57.69, or 3.0 percent, to 1,967.17. The Standard & Poor's 500 index added 17.95, or 1.6 percent, to 1,109.28.
Investors got some solace before the market opened when the Commerce Department confirmed estimates that the economy grew at a solid 4.1 percent annual rate during the last quarter of 2003. The gross domestic product, which measures the value of all U.S. goods and services, is considered the most important barometer of the economy's health.
Wall Street forecasts call for 4.5 percent GDP growth through the first half of this year, as tax incentives motivate consumers and business spending. But that level of growth may not be sustainable if the labor market doesn't improve dramatically.
Underscoring the painfully slow job growth that has hobbled the recovery, the Labor Department reported new claims for unemployment benefits rose last week by a seasonally adjusted 1,000 to 339,000. Many on Wall Street are hoping for positive news in the government's March jobs report, due at the end of next week.
While there was nothing in the day's economic news to discourage investors, there was no evidence to suggest the recovery was accelerating, either. With the next market-moving data, the March employment report, still a week away and first-quarter earnings not due until next month, it was unclear what would compel a move higher, and analysts were wary of attaching too much significance to the day's advance.
"Obviously we put in a wonderful sort of a rebound day," said Ken Tower, chief market strategist for Schwab's CyberTrader. "But it's still an open question whether this is just a snapback from a market that was oversold, or whether this is really the beginning of a more sustainable uptrend."
Among the top performers, Avon Products Inc. gained $4.78 to close at $75.35 after raising its profit estimates for the first quarter on strong sales of beauty products.
Nokia Corp. was up 59 cents at $20.13 after the company announced plans to introduce 40 new phone models this year, and add research and development staff in an effort to meet rising global demand.
Semiconductor firms led the gains in tech. Lattice Semiconductor Corp. gained 26 cents to $8.98 after raising its sales forecast for the current quarter. The Nasdaq index was also boosted by Dow component Microsoft Corp., which rose 78 cents to $25.19 a day after European regulators ruled against it in a closely watched antitrust case.
Apple Computer Inc. added $1.37 to $26.87 after saying it would have to postpone the overseas launch of the smaller version of its iPod music player because of unexpectedly strong U.S. demand.
Losers on the Nasdaq included Micron Technology Inc., down 25 cents at $15.56 after reporting a second quarter loss after the market closed Wednesday. The memory chip-maker has failed to make money in 12 of the last 13 quarters, but the loss was not as grave as analysts had predicted.
