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
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
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
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
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.