Stocks rally; market indexes still have much to recover

AP Business WriterNEW YORK (AP) -- Stocks surged higher Monday, carrying the Dow Jones industrials up more than 360 points, as bargain hunters returned to help Wall Street rebound from one of its worst weeks ever. But the market remained extremely nervous, and no one was betting that the gains would hold.

Investors will be wary of making or sticking by any major moves until it's clearer how the government will retaliate for the Sept. 11 terrorist attacks, analyst said. They are also trying to determine how much and for how long the economy will suffer.

The economic impacts of the attacks have already been felt as companies have warned of weaker profits and laid off thousands of workers as they expect consumers to spend and borrow less and take fewer vacations.

According to preliminary calculations, the Dow closed up 367.84, or 4.5 percent, at 8,603.65 after dropping 1,369.70 last week, its biggest-ever weekly decline. The Dow was up as much as 413.51 in the last hour Monday.

Like the Dow, the market's broader indicators bounced back after falling sharply last week, the first week of trading following the attacks, to their lowest levels in three years.

The Nasdaq composite index rose 75.92, or 5.3 percent, to 1,499.11, while the Standard & Poor's 500 index advanced 37.60, or 4 percent, at 1,003.40.

Monday's rebound didn't mean the market has overcome its uncertainty.

"The downtrend isn't over yet. We are rallying in a wider range, because of the collapse," said Bob Stovall, market strategist at Prudential Securities.

Analysts also said technical factors were likely influencing trading.

"Last week, there was kind of a panicky aspect, a throwing in of the towel. I think there is a realization that the lower prices have taken into account a lot of the bad stuff," said Charles Pradilla, chief investment strategist at SG Cowen. "That is not to say that there won't be more pain ... We will continue to vacillate around."

Pradilla and other analysts also believe the market could stumble a bit Tuesday when consumer confidence data is released by the New York-based Conference Board. While confidence was already waning before the attacks, it was likely that Americans grew even more uneasy afterward.

Monday's gainers were spread across nearly all market sectors, an indication that cheaper prices lured buyers rather than lessening fears about how the United States will retaliate for the attacks and how long the economy will suffer.

Among the Wall Street's winners, 3M soared $4.69 to $91.67, Citigroup climbed $2.64 to $39, and Wal-Mart advanced $2.62 to $47.28. Insurer American International Group, which expects its pretax losses from the attack to total $500 million, rose $3.95 to $71, recouping some heavy losses from last week.

AMR, the parent of American Airlines, rose 40 cents to $18.30, while Delta gained $1.52 to $23.99.

Another sign that Monday's buying was more technical than fundamental could be seen in stocks that rose despite investment firms' downgrades, which typically pressure shares.

Dell Computer rose $2.34 to $18.97, while Microsoft advanced $1.97 to $18.60, although Salomon Smith Barney reduced its earnings estimates and price targets on the companies. Cisco Systems rose 47 cents to $12.56 despite ABN Amro reducing its target price on the networking stock.

Advancing issues outnumbered decliners nearly 3 to 1 on the New York Stock Exchange where trading volume was heavy but still later than Friday. Volume came to a heavy 1.85 billion shares.

The Russell 2000 index, the barometer of smaller company stocks, rose 14.90 to 393.79.

Wall Street also drew some support from overseas markets. London's FT-SE 100 index finished up 4.1 percent, France's CAC-40 closed with a gain of 5.7 percent, and Frankfurt's DAX index rose 6.6 percent. Japanese markets were closed for a holiday.

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