Stock rally despite disappointing Motorola news

AP Business WriterNEW YORK (AP) -- Wall Street showed it can tolerate bad earnings news Wednesday, rallying sharply despite losses and job cuts at Motorola. The Dow Jones industrials have now won back more than 1,000 of the 1,369 points lost after the Sept. 11 terrorist attacks.

Analysts cautioned that the buying did not signal any kind of fundamental market turnaround -- but rather was an extension of a rebound that began two weeks ago.

"There definitely is some buying going on here. But there is also a sense of tenuousness in the air," said Scott Bleier, chief investment strategist at Prime Charter Ltd. "We are about to go back to the pre-Sept. 11 levels that we broke down from and that's likely to meet with some pretty significant resistance."

According to preliminary calculations, the Dow Jones industrial average rose 188.42 to 9,240.86, a gain of 1,005 from its close of 8,235.81 on Sept. 21, the end of the first week of trading after the attacks.

Broader stock indicators also advanced. The Standard & Poor's 500 index gained 24.24 at 1,080.99, while the Nasdaq composite index rose 56.07 to 1,626.26.

All three major indexes are now within striking distance of their pre-attack levels, but market watchers said it's too early to know if investors are feeling less worried about the weak economy and U.S. military action against terrorists or just bargain hunting.

"The bullish scenario here is that people are pretty resilient and will adapt to this new world," said Robert Harrington, head of trading at UBS Warburg. "The bearish scenario is that if there's another terrorist event, the market will fall again."

The buying Wednesday accelerated late in the session on investors' hopes that the lack of a negative reaction to Motorola's earnings indicated that Wall Street has already factored in U.S. companies' dismal third-quarter results. Those reports are due out this month.

Some of the gains also came from investors forced to buy stocks to cover bets they had made that those stocks would fall lower. The process is called short-covering.

Motorola advanced 19 cents to $16.91, overcoming news that the company was cutting another 7,000 jobs -- for a total of 39,000 this year -- and expects another quarterly loss.

Other tech stocks moved higher, too. Microsoft was up 95 cents at $55.51, a recovery from Tuesday's decline on an unsurprising Supreme Court decision to not hear the software maker's appeal of its antitrust case.

Among blue chips, American Express rose 52 cents to $29.52 on a court ruling that Visa and Mastercard will no longer be able to bar member banks from issuing credit cards from rivals.

General Motors gained $2.15 to $42.96, while retailer Home Depot advanced $2.31 to $40.21.

Biotech stocks also did well, thanks to defense-related spending. Nanogen rose $2.75 to $8.33 on word of a three-year, $1.5 million grant from the U.S. Army to continue development of devices for isolating and detecting biological warfare and infectious disease agents from human blood samples.

The market's strength came amid considerable uncertainty across the political and economic spectrum.

Doubts about when a business recovery will come are strong, although interest rates are at the lowest level in nearly four decades and President Bush is pushing for a $60 billion package to stimulate the economy. Also, many on Wall Street are still waiting to see what develops politically before doing any major buying.

"I'm not surprised to see the market up," Harrington, the UBS Warburg trader, said. "But it's too early to tell if this will last. Maybe the market's looking out to next year and hoping that between the government's fiscal and monetary policy moves, the economy is going to turn around.

Advancing issues led decliners 2 to 1 on the New York Stock Exchange. Volume came to 1.29 billion shares, compared with 1.18 billion Tuesday.

The Russell 2000 index gained 12.98 to 421.66.

Overseas, Japan's Nikkei stock average dropped 0.5 percent. European stocks fared better. Germany's DAX index gained 3.2 percent, Britain's FT-SE 100 rose 2.9 percent, and France's CAC-40 advanced 3.4 percent.

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