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Fri, Mar 09, 2001 EST
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Stocks Extend Rally on Hopes of Market Turnaround
By Amy Baldwin   Associated Press
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NEW YORK — 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.

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