Stocks trade higher, resume rally
By Amy Baldwin AP Business Writer
NEW YORK (AP) – A late-day wave of momentum buying put Wall Street back on an upward path Tuesday, giving stocks a moderate advance despite an absence of major earnings or economic news.
Most of the market’s gains came in the final hour. Stocks retraced ground lost earlier in the session when Federal Reserve Chairman Alan Greenspan warned that natural gas prices would be higher for an extended period.
“Today just seems like a pause till we figure out if the market ready to resume its advance or if are we going to keep paying for what happened last week,” when stocks enjoyed huge rallies, said Brian Pears, head equity trader at Victory Capital Management in Cleveland.
The Dow ended a lightly traded session up 74.89, or 0.8 percent, at 9,054.89, according to preliminary calculations. The gain wiped out much of Monday’s 82.79-point loss.
The broader market also moved higher. The Nasdaq rose 23.70, or 1.5 percent, to 1,627.67. The S&P advanced 8.91, or 0.9 percent, to 984.84.
Last week, the Dow Jones industrials closed above 9,000 for the first time in nearly 10 months, while the Standard & Poor’s 500 index traded above 1,000 for the first time in almost a year. It was also the seventh winning week out of the past eight for the S&P and the Nasdaq composite index and the sixth weekly advance out of eight for the Dow.
“The last two weeks have really felt frothy,” with gains, Pears said.
Wall Street has rallied for three months, lifted by better-than-expected first-quarter profits, a quick end to the war in Iraq, a new tax cut package, and improving economic data.
Monday’s sell-off representing the first time in three weeks, or since May 20, that the all three of the market’s main gauges declined.
At the end of Tuesday’s trading, the Dow had gained 20.3 percent from March 11, when the rallies began, while the Nasdaq had climbed 28 percent and the S&P had advanced 23 percent.
Some analysts say that while the market’s fundamentals are improving, it’s still hard to explain those robust gains any other way than to say the stocks are simply moving on their own upward momentum.
“I have just sort of said, “OK, the market is overbought, but so what,”‘ said Richard A. Dickson, senior market strategist, at Lowry’s Research Reports in Palm Beach, Fla.
Market observers got another reason to question stock prices Tuesday, when Greenspan said higher gas prices, which are than twice what they were last year, “have put significant segments of the North American gas-using industry in a weakened competitive position” against industries overseas and that they are likely to persist into the beginning of 2004.
But in his appearance before the House Energy and Commerce Committee, Greenspan did not specifically address whether a prolonged increase in natural gas prices would hinder the economic recovery.
Jones Apparel rose $1.70 to $29.40 after Merrill Lynch raised its rating to “buy” from “neutral.”
Boeing advanced $1.14 to $34.31 Tuesday after Banc of America Securities upgraded it to “buy” from “neutral.”
Freddie Mac rose $1.24 to $51.50, having plunged $9.61, or 16.1 percent, on Tuesday when it announced the departure of its top three executives and that it was restating three years’ worth of earnings.
Nokia fell 25 cents to $17.71 after affirming its second-quarter earnings estimate but warning that sales in its mobile phone division could miss forecasts calling for growth between 4 percent and 12 percent.
Advancing issues outnumbered decliners slightly more than 9 to 5 on the New York Stock Exchange. Volume was light.
The Russell 2000 index, which tracks smaller company stocks, rose 6.17, or 1.4 percent, to 450.96.
Overseas, Japan’s Nikkei stock average finished Tuesday down 0.4 percent. In Europe, France’s CAC-40 rose 0.7 percent, Britain’s FTSE 100 fell 0.4 percent and Germany’s DAX index gained 1.5 percent.
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AP-ES-06-10-03 1631EDT