Stocks advanced Monday as investors took
advantage of cheaper prices and momentarily put aside their fears
about the slowing economy.
The advance came despite word from more companies that future
profits will continue to be weak. Analysts are split over whether
that means the market is poised to rally or whether investors are
just temporarily bargain hunting.
The Dow Jones industrial average rose 95.99 points to close at 10,562.30. Volume was light as many traders stayed home due to the winter storm in the Northeast.
Broader market indicators also closed higher. The Nasdaq composite
index closed up 25.30 points at 2,142.93. The Standard & Poor's 500 index
gained 7.23 points to 1,241.41.
Much of the tech advance came from the semiconductor sector,
where Altera gained $1.63 at $27.50 and Vitesse Semiconductor rose
$1.25 to $39.06. Semiconductors traded higher although several
companies including Vitesse curtailed their earnings expectations.
The sector also overcame downgrades of 15 stocks including Altera
by Prudential Securities, which believes the shares will bottom out
in the second or third quarter.
The trend of surmounting bad news extended further than
semiconductors. Software maker Oracle, which issued a profit
warning on Thursday and fell 21 percent on Friday, made a slight
advance, up 6 cents at $16.94.
As companies defy bad news, the chances of a longer-lasting
market rally increase, said Arthur Hogan, chief market analyst for
Jefferies & Co.
"We have finally come to the point where we have a price-news
divergence meaning stocks don't go down on bad news," Hogan said.
"That is typical of a (market) bottom."
Not all stocks, however, were able to shake off the news of the
day. Coca-Cola, a Dow stock, tumbled $2.85 to $49.70 after the
company announced a management reorganization plan on Sunday that
included the elimination of the president's post.
A bit of optimism about the economy could be seen in blue chip
dealings. Investors bid down the safer stocks like drug issues
after months of running them up when riskier tech sectors fell out
of favor. Merck lost 98 cents to trade at $79.17.
Meanwhile, the market sent more economically sensitive blue
chips higher. Consumer cyclical stocks, called by that name because
they suffer when the economy slows down, led the Dow's move up.
Caterpillar climbed $1.75 to $44.43, and General Motors gained 81
cents at $55.11.
However, some analysts don't expect any gains to last. They say
investors are still cautious and call market advances "trading
rallies" spurred only by cheaper prices. The consensus on Wall
Street is that selloffs will continue to be the dominant trading
pattern as the market faces more bad news about earnings and how
much the economy has weakened.
"It's a rally in the Dow and in (consumer) cyclicals. That's
about it though," said Gary Kaltbaum, a technical analyst for
First Union Securities. "I don't count it as much as anything.
Volume is light because of the snowstorm."
Advancing issues outnumbered decliners nearly 8 to 7 on the New
York Stock Exchange. Volume was 723.28 million shares, well below
1.02 billion at the same point Friday.
The Russell 2000 index was down 0.50 at 476.38.
