Sat, Mar 31, 2001 EST
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Stocks Move Higher Monday
By Lisi De Bourbon   Associated Press
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NEW YORK — The Dow Jones industrials moved higher Monday, extending Friday's rally as investors grew cautiously optimistic that Wall Street might be recovering after two weeks of heavy losses.

But analysts warned there are no guarantees the gains could be sustained in the long term.

"I don't see any conviction behind it," said Tony Cecin, senior managing director and head of equity trading at U.S. Bancorp Piper Jaffray Inc. "We need to see three, four, five days of plus-Dow movement on increasing volume every day before people begin to feel this is something people can maybe pin their hats to."

At midafternoon, the Dow Jones industrial average rose 161.75 to 9,666.53, adding to Friday's 115-point gain.

The broader market was mixed. The Nasdaq composite index, moderately higher until early afternoon, was off 13.26 at 1,915.42. Wall Street's broadest measure, the Standard & Poor's 500, rose 9.36 to 1,149.19.

While the general atmosphere was improving, the market still showed its vulnerability.

Cisco Systems fell $1.06 cents to a 52-week low of $17.63 after two analysts lowered their estimates for the Internet networking company's third-quarter and fiscal 2001 results. The decline also followed a published report in which chief executive officer John Chambers predicted the economic downturn would continue for at least three quarters.

But analysts saw some strength despite Cisco's slide. Arthur Hogan, chief market analyst at Jeffries & Co. said it was a "very telling statement" that the Nasdaq, while lower, for the most part held its own although one of its leading stocks was struggling.

"My personal feeling is that most — if not all the damage is done — has been done on the Nasdaq," said Cecin.

Sectors that were hard-hit last week recovered Monday, including health care. Merck rose $2.52 to $71.50 and Pfizer was up 96 cents at $38.49. Financial stocks also were ahead, with Bear Stearns up 51 cents at $46.90 and Cigna gaining $1.89 to $104.90.

Utility stocks benefited from news that California's top power regulator proposed a 40 percent increase in electricity rates. Pacific Gas & Electric rose $3.32 to $13.97 and Edison International shot up $3.23 to $14.43.

The market also drew some strength from expectations for lower interest rates.

Alan Ackerman, executive vice president of Fahnestock & Co., suggested investors are anticipating that the Conference Board's report on consumer confidence, due out Tuesday, will raise the prospect of a further slowdown in consumer spending and encourage the Federal Reserve to lower rates before it meets again in mid-May.

In addition, the government reported Monday that new home sales fell 2.4 percent in February, providing further evidence that consumers are cutting back because of the slowing economy.

Analysts believed that Monday's advance, while a good sign, might not be sustainable because companies are still in the process of issuing warnings about disappointing first-quarter earnings. So it is quite possible that more selling is ahead.

The Dow closed Friday at 9,504.78, down 1,139.84, or 10.7 percent, during the previous two weeks and 18.9 percent off its peak of 11,722.98, reached Jan. 14, 2000.

Advancing issues outnumbered decliners by nearly 2 to 1 on the New York Stock Exchange, where volume was 869.64 million shares, compared with 1.08 billion at the same point Friday.

The Russell 2000 index, which tracks the performance of smaller companies stocks, was up 3.93 at 447.20.

Overseas market were higher Monday. Japan's Nikkei stock average closed up 4.9 percent.

In afternoon trading in Europe, Germany's DAX index rose 3.3 percent, Britain's FTSE 100 advanced 3.2 percent, and France's CAC-40 climbed 3.5 percent.

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