Stocks rise due to bargain hunting, window dressing
Wednesday, March 27, 2002
AP Business WriterNEW YORK (AP) -- Blue chips enjoyed a solid advance Wednesday, the second in a row, as investors continued their search for bargains and big institutions bought stocks to dress up their portfolios.
But tech shares, which many market analysts predict will be the last to recover from recession, rose only slightly after struggling to stay in positive ground.
The Dow Jones industrial average closed up 73.55, or 0.7 percent, at 10,426.91. The Dow rose 71.69 Tuesday to break a four-session losing streak that began after the Federal Reserve indicated it might raise interest rates later this year to keep economic growth steady.
That stretch of declines made the blue chips much more attractive to investors Wednesday.
The market's broader indicators had a more modest advance. The Nasdaq composite index inched up 2.58, or 0.1 percent, to 1,826.75, and the Standard & Poor's 500 index gained 6.09, or 0.5 percent, to 1,144.58.
Trading was light, as it has been all week as traders prepared to celebrate Passover beginning Wednesday. Also, the market will be closed on Friday in observance of Good Friday. Price swings tend to be larger in light volume.
New York Stock Exchange volume came to 1.16 billion shares, down from 1.20 on Tuesday.
Analysts attributed some of the market's upturn to what's known as window dressing, an end-of-the-quarter practice in which institutional investors including mutual fund managers purchase shares to make their portfolios look more impressive in reports to shareholders.
Meanwhile, analysts said the buying had little to do with the Commerce Department's report on new home sales, which rose 5.3 percent in February. The advance pushed up sales of single-family homes to a seasonally adjusted annual rate of 875,000, less than the 890,000 analysts were expecting.
"I just don't understand why we've rebounded as much as we did. The housing numbers were good but nothing earth shattering. My guess is you have some window dressing going on," said Todd Clark, head of equity trading at Wells Fargo Securities.
Analysts expect stocks to make little progress as companies report first-quarter earnings beginning next month. While the results promise to be better than the previous quarter and even slightly above expectations, they still won't be robust.
"It could be time for a rest," said Richard A. Dickson, a technical analyst for Hilliard Lyons in Louisville, Ky., referring to the rallies the Dow has enjoyed since early February. The Dow's closing high for the year came March 19, when the index finished at 10,635.25, having gained 613.75 points or 6.1 percent.
"It looks to me like we are caught in a trading range," said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co.
Hill noted that the broader market has made little progress so far this year. Indeed, less than 100 points separate the S&P's closing high, 1,172.51 on Jan. 4, from its closing low of 1,080.17 on Feb. 7.
Among Wednesday's winners, Boeing rose $1.54 to $47.33, Citigroup climbed 85 cents to $50, and Procter & Gamble advanced 57 cents to $90.02.
The tech sector was narrowly mixed. IBM rose 49 cents to $103.39. But optical networker Ciena fell 33 cents to $8.07, a day after announcing it was immediately cutting 650 jobs, or 22 percent of its work force.
Advancing issues outnumbered decliners 2 to 1 on the NYSE.
The Russell 2000 index, the barometer of smaller company stocks, rose 4.19, or 0.8 percent, to 505.85.
Overseas, markets were mixed Wednesday with Japan's Nikkei stock average finishing up 1.0 percent. In Europe, Germany's DAX index fell 0.8 percent, France's CAC-40 slipped 0.1 percent, and Britain's FT-SE 100 rose 0.4 percent.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com