A late afternoon rally fueled by strong corporate earnings boosted Wall Street higher Monday, as investors brushed off earlier jitters and bought up big-name technology stocks at bargain prices.
|Thomas P. Hyland of LaBranche & Co. works at his post on the floor of the New York Stock Exchange Monday
The Dow Jones industrial average jumped 276.74 points, or 2.69 percent, to 10,582.51, led higher by powerhouse General Electric and consumer products giant Procter & Gamble. Drug and finance names also showed strength to offset the drop in ExxonMobil and retailers.
Top technology shares soared to boost the Nasdaq composite index by 217.87 points, or 6.56 percent, to 3,539.16. The gauge logged its biggest one-day point gain as Intel Corp., Cisco Systems and Sun Microsystems rebounded from Friday's carnage on the market.
With Monday's gains, the Dow is now off 7.96 percent for the
year, while the Nasdaq is down 13.03 percent. From Nasdaq's
all-time high of 5,048.62 hit March 10, the gauge is off 29.9
percent. Wall Street usually defines a bear market as a drop of
20 percent or more from a peak.
"It looks like Friday's downdraft just sort of vaporized,"
said Doug Myers, vice president of equity trading at Wachovia
Securities in Atlanta. "It didn't follow through, which is very good."
Despite the bullish ending, it was a topsy-turvy day on Wall Street, with both the Dow and Nasdaq moving in and out of positive territory for much of the trading session. Stocks spent most of the morning in positive territory, turned negative at midday, but then regained strength in the afternoon.
For the most part, investors resisted another bout of panic selling.
|A trader claps his hands on the floor of the New York Stock Exchange shortly after the opening bell on Monday|
"What's happening is people are cautiously dipping back
into the water but doing it with brand names and companies that
have solid revenue and earnings growth," said Ned Riley, chief
investment strategist at State Street Global Advisors in Boston.
Waves of selling swamped U.S. stocks on Friday on news that
inflation raced at its highest speed in more than five years.
The Nasdaq composite fell 25 percent last week, the worst
performance ever by a major U.S. stock index. The Dow Jones industrial average lost a record 617.78 points, or 5.66 percent to 10,305.77 on Friday.
Market watchers blamed much of the recent selling momentum on margin calls, or demands that a customer who borrowed money to buy stocks deposit enough money to bring an account up to
minimum requirements. Those calls can accelerate selling as
investors liquidate their holdings to meet the calls.
Nikkei Closes Down Slightly
Asian shares regained some lost ground Tuesday, but Tokyo prices
slipped amid worries any recovery from the global sell-off could prove fragile.
"We're not out of the woods entirely," said Russell Jones,
chief Asia economist for Lehman Brothers in Tokyo.
Japan's 225-issue Nikkei Stock Average finished with a loss of
39.12 points, or 0.2 percent, at 18,969.52, after a wild session
that saw it up by as much as 1.7 percent in the morning and down by
more than 2 percent in the afternoon.
The Nikkei had lost 7 percent of its value on Monday, when Asian
exchanges were gripped by panic-selling in response heavy to losses
last week in New York.
Wall Street's better performance later Monday eased many of the
more extreme fears in Asia, but traders were more cautious than
optimistic after seeing shares take such huge recent hits.
In Hong Kong, where the blue chips had fallen 8.6 percent on
Monday, they came back today with a gain of 3.7 percent by late
afternoon. The Hang Seng Index was up 548.43 points at 15,310.71
with less than an hour left to trade.
The Korea Composite Stock Price Index started Tuesday trading
with a gain of more than 8 percent but soon drifted lower,
finishing up by 5.6 percent.
South Korean shares were hit particularly hard Monday with a
loss of 11.6 percent.
In other Asia-Pacific markets Tuesday, Australian shares rose 2.3
percent, shares in Singapore were up 1.9 percent and Taiwanese
shares closed with a gain of 3.5 percent.
Cohen Helps Bulls
Stocks were helped from some bullish comments from key figures on Wall Street.
Influential Wall Street analyst Abby
Joseph Cohen was unmoved from her long-term bullish view of
equities by last week's market free-fall, repeating on Monday
her earlier forecasts for gains in major stock indices.
Cohen, chair of the Goldman Sachs investment policy committee, on Monday reiterated her year-end 2000 forecast for the Standard & Poor's 500 index at 1,575, and her spring 2001
target of 1,625.
She also said she expects the Dow Jones Industrial average
to be at 12,600 at the end of this year.
"Recent market volatility has encouraged us to thoroughly
review three key assumptions in our market outlook ... corporate
earnings, inflation and interest rate trends," Cohen said in a
"We are making no changes to these elements of equity valuation and, therefore, no change to our price targets for the S&P; 500," she added.
Meanwhile, Thomas Galvin, chief investment
officer at Donaldson, Lufkin and Jenrette, switched his asset
allocation. He boosted his stakes in stocks and cash and
eliminated them in bonds.
And amid the market jitters, major U.S. corporations continued
to post robust quarterly earnings. Profits from both drug maker
Eli Lilly and Co. and Ford Motor Co. were above
Wall Street forecasts.
Financial services firm Citigroup Inc. also reported a
52 percent rise in first-quarter profits to a record.
"We have a bit of a rebound but I don't think you can say
it's over," said Alan Skrainka, chief market strategist at
Edward Jones, referring to the price pullback.
"I think you'll continue to see a flight to quality and
you'll continue to see the dot-coms that don't have any profits
slowly sink into the sunset," he said. "It's again a split
personality market but the difference is that the split
personality aspect of this market is taking place within
Reuters and The Associated Press contributed to this report