Nov 13, 2002 4 min read

By Hope Yen AP Business Writer

NEW YORK (AP) – Wall Street put aside worries about Iraq Tuesday and sprinted higher as investors snapped up stocks made more attractive by three days of declines. Tech stocks were the big winners as upbeat forecasts from Cisco Systems and Vodafone gave Wall Street another incentive to buy.

The market gave back some of its gains in the final 90 minutes, but analysts said the advance was nonetheless a pleasant surprise given investors’ growing fears about a war with Iraq. They said investors were still resilient, and hoping that lower interest rates and a Republican-controlled Congress can get the economy moving again.

“By and large, the overall framework for the market is to have a positive bias,” said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.

According to preliminary calculations, the tech-dominated Nasdaq composite index climbed 30.37, or 2.3 percent, to 1,349.56, nearly erasing its Monday loss of 40.09.

The Dow Jones industrial average rose 27.05, or 0.3 percent, to close at 8,386.00. The blue chips were up as much as 145.72 before losing ground toward the close.

Analysts said terrorism fears may have pressured stocks in the final hour, after Al-Jazeera TV in Egypt aired an audiotape allegedly of Osama bin Laden praising the Oct. 12 Bali bombings and Chechen hostage taking in Moscow. U.S. officials were trying to verify if the voice was bin Laden’s.

The Standard & Poor’s 500 index gained 6.76, or 0.8 percent, to 882.95.

Tech stocks got a boost after Cisco’s CEO John Chambers said the maker of network equipment expected to have continued aggressive spending in research and development, according to Dow Jones Newswires. The company’s shares jumped 71 cents to $12.87.

Vodafone rose $2.19 to $17.64 after the mobile phone company, Europe’s largest, reported a smaller loss for its fiscal first half, raising hopes of a rebound in the telecommunications industry.

“The real focus of investors continues to be on the economy and earnings,” said Hugh Johnson, chief investment officer at First Albany Corp. “You had some news today that suggested we may have turned the corner for telecommunications. That moved things along.”

Despite increased investor optimism following five weeks of Dow gains, analysts say a possible war with Iraq is weighing on traders’ minds.

Indeed, Wall Street’s gains were somewhat limited after Iraq’s parliament Tuesday unanimously recommended rejection of a U.N. resolution on arms inspections. The final decision rests with Saddam; the United Nations has asked Iraq to respond by Friday.

Investors also remain nervous about the strength of the economic recovery, particularly after the Federal Reserve’s surprisingly large half-point rate cut last week, and are concerned the market’s recent rally may have been too much, too soon.

On Tuesday, Federal Reserve Vice Chairman Roger Ferguson and three other Fed officials offered some hopeful comments about the recovery, saying they expected gradual strengthening in the economy.

Investors also were waiting to hear remarks from Fed Chairman Alan Greenspan when he testifies before Congress on Wednesday.

“There’s a real tug of war,” First Albany’s Johnson said. “You can build a real good case for the economy and earnings. You can build a real good case for a sinking spell or deflation. What will happen between now and the end of the year will depend on the economic news we see each day.

“But it’s a tossup,” he said. “The market may reflect that by being trendless, although very volatile.”

Motorola gained 37 cents to $8.75 after executives with the world’s second-largest mobile phone producer affirmed its reduced fourth-quarter revenue and earnings forecasts, according to Dow Jones Newswires.

J.C. Penney jumped $2.45 to $20.96 after the retailer reported third-quarter earnings that beat Wall Street’s estimates, and raised its fourth-quarter outlook above expectations.

3M gained $1.45 to $127.81 after the diversified technology company agreed to pay $850 million in cash for Corning Precision Lens, the largest worldwide manufacturer of lens systems for rear projection televisions. Corning rose 43 cents to $2.59.

Decliners included Dow component Philip Morris, which tumbled $5.95 to $37.03, after the tobacco and food giant said it couldn’t confirm its growth estimates for 2003 due to weak domestic tobacco volume.

Advancing issues outnumbered decliners 8 to 5 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, rose 5.55, or 1.5 percent, to 374.69.

Overseas, Japan’s Nikkei stock average finished 0.1 percent higher. In Europe, Germany’s DAX index was up 2.4 percent, France’s CAC-40 rose 0.4 percent, and Britain’s FTSE 100 gained 1.7 percent.

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