Dow Ends Up 378; Nasdaq Rises 62
Dow Ends Up 378; Nasdaq Rises 62
Oct. 15, 2002
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NEW YORK (AP) _ Powered by a batch of surprisingly good earnings reports, stocks barreled higher Tuesday with the Dow Jones industrials soaring more than 375 points for a four-day gain of nearly 1,000 points. The rally also gave the Dow its seventh-biggest point gain ever, and that propelled the blue chips back above 8,000.
The Dow owed some of its lift to upbeat earnings from three of its components _ Citigroup, General Motors and Johnson & Johnson.
All three of the market's major indexes scored a four-session winning streak. That's a feat the Dow and Standard & Poor's 500 index last accomplished 10 weeks ago in the period ending Aug. 9. The Nasdaq composite index hasn't had a four-day rally in five months, or since May 17.
Analysts said investors were feeling enthusiastic about the earnings reports, having been shaken up in the past few weeks as companies lowered their profit outlooks.
``We are either manically depressed about (stock) prices or irrationally exuberant. That is what we have today, swinging the other way,'' said Arthur Hogan, chief market analyst at Jefferies & Co.
The Dow closed up 378.28, or 4.8 percent, at 8,255.68, according to preliminary calculations. The Dow claimed a four-day advance of 591.13, which allowed it to close above 8,000 for the first time since Sept. 18 when it stood at 8,172.45.
The broader market was also sharply higher. The Nasdaq climbed 61.90, or 5.1 percent, to 1,282.43, having advanced 106.42 in the previous three sessions. The S&P rose 39.82, or 4.7 percent, to 881.26, adding to a three-day gain of 64.68.
Tuesday marked the first big day for companies releasing third-quarter profits and investors were grateful for positive results after having their expectations slashed in the weeks leading up to earnings season. The buying in the previous three sessions had mostly to do with lower stock prices following six weeks of sell-offs.
Analysts were encouraged by the market's ability to forge ahead for four straight days as recent rallies have been shorter-lived as sell-offs quickly erased gains.
``There is more of a sense of sustainability,'' said Larry Wachtel, market analyst at Prudential Securities.
The finance sector was one of Wall Street's biggest winners Tuesday. Citigroup climbed $3.84 to $34.15 on third-quarter earnings that were a penny higher than analysts' estimates.
Bank of America, which beat expectations by 4 cents a share, jumped $5.05 to $65.76.
General Motors rose $3.44 to $36.70 after posting earnings that beat analysts' expectations by 21 cents a share and raising its fourth-quarter outlook.
And Johnson & Johnson advanced $1.72 to $59.55 after reporting profits that were a penny a share higher than anticipated and raising its yearly forecast.
Analysts said the reports were also reassuring in that they detailed cost-cutting measures companies have undertaken to boost the bottom line.
``One thing that stands out to me is the cost cutting that has been involved,'' Wachtel said. ``There is this awareness (in the market) that we can live with a moderate economy, because costs have come down so much.''
Another winner was Intel, up $1.41 at $16.51 ahead of its earnings due later in the day.
Brokerage upgrades also contributed to the market's gains. American Eagle rose $1.65 to $14.02 and Gap advanced 46 cents to $10.45 after US Bancorp Piper Jaffray upgraded the retailers to ``outperform'' from ``underperform.''
Philip Morris advanced $1.71 to $40 after Goldman Sachs raised its rating to ``recommended list'' from ``market outperform.''
Investors were so encouraged by the upbeat earnings reports and stock upgrades that they overlooked disappointing economic data. The Commerce Department reported that U.S. companies reduced their inventories of unsold goods by 0.1 percent in August, a sign that businesses are uneasy about the uneven economic recovery. Additionally, businesses' sales grew by 0.2 percent in August, dropping from a brisk 1.3 percent increase recorded in July.
Advancing issues outnumbered decliners nearly 4 to 1 on the New York Stock Exchange. Volume was heavy.
The Russell 2000 index, which tracks smaller company stocks, rose 14.00, or 4 percent, to 360.53.
Overseas, stocks rose sharply Tuesday. Japan's Nikkei stock average closed up 3.6 percent. In Europe, Britain's FTSE 100 rose 5.1 percent, while France's CAC-40 and Germany's DAX index each surged 7 percent.
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