Buyers returned to Wall Street Tuesday, bidding
stocks sharply higher on hopes the market has bottomed and the
economy is turning around.
Gains were widespread across blue chip and tech sectors, adding
to a modest advance the market made Monday.
The Dow Jones industrial average gained 28.92 points to close at 10,591.22.
Broader market indicators moved even higher. The Nasdaq composite index advanced 61.55 points to end at 2,204.47, and the Standard & Poor's 500 index rose 12.40 points to 1,253.81.
Stocks continued to rise despite bleak earnings outlooks, which
some analysts say is a sign the market is ready for a longer-term
rally. More bearish analysts, however, say the buying is temporary,
a so-called bear market rally.
"I think that, at least for the Old Economy names, this (rally)
could be for real. We're starting to get a lot of fundamental signs
that maybe things are about to turn better," said James Meyer,
director of research at Janney Montgomery Scott, pointing to
economic reports issued last week that said construction spending
had risen and Americans' income and spending had also increased.
That information has helped send up retailing shares, including
Wal-Mart, up $1.41 at $49.78. Consumer cyclical stocks, which are
called that because they rise or fall with the economy, also have
benefited and included a climb by Ford, up 83 cents at $29.13.
"The tech rally is a bit more suspicious," Meyer said, adding
that it will take a while for computer and chip makers to work off
excess inventories.
For now, Meyer said, techs like Intel are trading higher largely
because stock prices seem cheap to investors. Dow component Intel
rose $2.06 to $32.44 even though the chip maker slashed prices on
its processors by as much as 19 percent earlier this week. Intel
cited an inventory pileup that came as demand slowed and the
economy cooled.
Bargain hunting tech investors overlooked more bad news, sending
Cisco up $1.80 to $24.88 after shares were downgraded Tuesday by
Banc of America.
Semiconductor stocks rose sharply again Tuesday with Micron
Technology soaring $5.52 to $44.52. The sector advanced despite
widespread downgrades Monday by Prudential Securities, which also
said it believes semiconductors will bottom in the second or third
quarter.
Investors likely were cheered somewhat by economic news released
earlier. The government reported that Americans' productivity, a
key measure of rising living standards, slowed to a 2.2 percent
rate of growth in the fourth quarter as the economy weakened. The
figure was slightly ahead of the 2.0 percent analysts were
expecting.
Advancing issues outnumbered decliners 3 to 2 on the New York
Stock Exchange. Volume was 746.11 million shares, well ahead of
610.50 million at the same point Monday when many traders stayed
home because of snow storms in the Northeast.
The Russell 2000 index, which measures the performance of
smaller companies stocks, was up 5.73 at 481.52.
