May 17, 2002 3 min read

By Amy Baldwin AP Business Writer

NEW YORK (AP) – Investors shopped selectively on Wall Street Thursday, mildly encouraged by news that IBM intends to cut costs but still wary about bidding stocks higher following a big rally earlier in the week. The major indexes closed modestly higher.

The market extended an advance that allowed the tech sector to claim its first three-day gain since early April and the Dow Jones industrials to jump 358 points over Monday and Tuesday. Still, the mood was quiet, which analysts attributed to some profit taking.

“Sentiment is still rather wishy-washy or negative regarding the stock market,” said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray.

The Dow closed up 45.53, or 0.4 percent, at 10,289.21, according to preliminary calculations.

The broader market also enjoyed a moderate boost. The Nasdaq composite index rose 4.88, or 0.3 percent, to 1,730.44 after climbing 124.71 in the previous three sessions. Until Wednesday, the Nasdaq hadn’t had either a three- or four-session winning streak since a four-day rally March 26 through April 1.

The Standard & Poor’s 500 index gained 7.16, or 0.7 percent, to 1,098.23.

Analysts were reluctant to predict how long the market might be able to hold its gains from this week. Much of the buying has been based on lower prices following nearly two months of selling as companies released tepid earnings results and offered murky outlooks. By last week, the market’s indexes had tumbled to levels not seen since early October.

“The market in general was so negative for so long. … The market is one of fits and starts. We are at, or at least near, the bottom of the trading range,” Belski said.

Among Wednesday’s gainers, Dow industrial IBM rose 95 cents to $85.45, the day after CEO Samuel Palmisano said at an analysts meeting the company would cut costs but declined to comment about possible layoffs.

Dell Computer advanced 15 cents to $27.85 ahead of its earnings results due after the market closed.

Retailer AnnTaylor gained 20 cents to $48.94 after raising its outlook for 2002.

But biotechnology was a weak spot after ImClone Systems posted a profit loss that was 7 cents bigger than analysts’ estimates. ImClone fell $1.99 to $13.06.

The market’s advance was limited by a disappointing report from the Commerce Department, which said housing construction fell by 5.4 percent in April, the second straight monthly decline.

Analysts are doubtful the market will be able find a steady upward path until the preponderance of economic reports are positive. And buying is likely to be concentrated among Wall Street’s safer havens – investors are likely to keep gravitating toward blue chips where earnings growth is easier to forecast rather than tech stocks.

Technology gains, analysts say, will be temporary as they will be attributable to post-selloff bargain hunting as has been the case this week.

“Investors have been buying stocks of companies where earnings are dependable. The growth rate may be low, but the earnings are dependable. But that’s what works in this market,” said Hugh Johnson, chief investment officer at First Albany Corp.

Despite the market’s advance, declining issues outnumbered advancers nearly 9 to 7 on the New York Stock Exchange where volume was relatively light at 1.23 billion shares, down from Wednesday’s 1.39 billion.

The Russell 2000 index, the barometer of smaller company stocks, fell 6.13, or 1.2 percent, to 507.41.

Overseas, Japan’s Nikkei stock average finished Thursday up 0.8 percent. In Europe, France’s CAC-40 slipped 0.1 percent, Britain’s FTSE 100 declined 0.2 percent, and Germany’s DAX index fell 0.5 percent.

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New York Stock Exchange: http://www.nyse.com

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