Nov 22, 2002 4 min read

By Lisa Singhania AP Business Writer

NEW YORK (AP) – Wall Street’s rally gained momentum Thursday, with stocks rising sharply for the second straight day, this time on Hewlett-Packard’s better-than-expected results. The Dow Jones industrials rose more than 220 points and closed at their highest level in three months.

And, the Nasdaq composite index soared nearly 50, and surpassed its post-Sept. 11, 2001 closing low, an achievement last seen four months ago.

Along with H-P’s news, investors were also enthused about two new economic reports, one of which suggested the employment slump might be easing. The other showed a flat but still stronger-than-expected reading in the Index of Leading Economic Indicators, a closely watched economic forecasting gauge.

But analysts were more subdued, knowing that the market often rallies spectacularly in the final three months of the year.

“It’s bits and pieces of better news, and no overriding theme, but it’s nice to see some gains,” said Mike Kayes, chief investment officer at Eastover Capital in Charlotte, N.C. “This may be the start of the year-end rally, but I don’t think it’s going to be straight up from here.”

The Dow closed up 222.42, or 2.6 percent, at 8,845.43, according to preliminary calculations. The blue-chip average finished at a level not seen in three months, or since Aug. 26 when it stood at 8,919.01.

Thursday’s advance was the Dow’s best one-day point gain in more than a month, or since Oct. 11, when it jumped 316.34. And, along with Wednesday’s gain of 148.23, the Dow was well positioned for its seventh straight weekly advance.

The biggest gains came in the technology-laden Nasdaq, which surged 48.11, or 3.4 percent, to 1,467.46. Adding to Wednesday’s 44-point gain, the index was also trading above its post-Sept. 11 low close of 1,423.19. It last closed above that level on July 5.

The Standard & Poor’s 500 index climbed 19.64, or 2.2 percent, to 933.79.

Analysts attributed much of the gains simply to timing as the fourth-quarter is typically the strongest for stocks.

‘”Tis the season,” said Brian Belski, fundamental market strategist for US Bancorp Piper Jaffray. “People are used to being bullish in the fall.”

H-P rose $2.14, or nearly 12.7 percent, to $18.99 as investors reacted to the company’s better-than-expected earnings released late Wednesday. The technology bellwether also reaffirmed its forecasts for the current quarter.

The buying spread to other technology stocks, including Microsoft, up $1.22 at $57.84, and Intel, up $1.04 at $20.19.

And, Cisco Systems rose 86 cents to $15.24 after Standard & Poor’s upgraded the shares to “buy” from “hold.”

Merck rose $1.34 to $58.82 on hopes that a vaccine it is helping develop could prevent cervical cancer. General Electric climbed $2.05 to $26.85 after the company said it expects consistent economic growth next year and announced a dividend increase.

The gains were helped by encouraging reports from the Labor Department and Conference Board. First, the Labor Department reported new claims for unemployment benefits fell last week to the lowest level in four months.

Then, the Conference Board reported that its Index of Leading Economic Indicators was unchanged at 111.4 in October, after slipping a revised 0.4 percent the previous month. Analysts had predicted a drop of 0.1 percent for October in the index, used to measure future economic activity.

Still, analysts were cautious.

“The psychology is getting better and we definitely think the bottom of market was hit in October and some of these signs that companies are starting to improve their profits is first step to good market,” said Matt Brown, head of equity management at Wilmington Trust. “I think we’re on track. The only thing that would knock us off is the international uncertainty, the Iraq issue, terrorism. And that’s still out there.”

Trading was brisk, with advancing issues leading decliners more than 2 to 1 on the New York Stock Exchange. Volume was heavy, especially compared with recent light trading.

The Russell 2000 index, which tracks smaller company stocks, rose 9.11, or 2.3 percent, to 397.70.

Overseas, Japan’s Nikkei stock average rose 2.5 percent. In Europe, France’s CAC-40 advanced 4.3 percent, Britain’s FTSE 100 climbed 2.3 percent and Germany’s DAX index gained 2.9 percent.

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On the Net:

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

Nasdaq Stock Market: http://www.nasdaq.com