Stocks rebound in late rally

AP Business WriterNEW YORK (AP) -- Buyers swooped back into the stock market late in Thursday's session, reversing a sharp decline as the passage of anti-terrorist legislation and a government stimulus package raised hopes for an economic recovery.

The late turnaround began in semiconductor shares and the energy sector, where a strong earnings report from Williams Cos. triggered a rally, but the buying soon spread to other areas of the market.

According to preliminary calculations, the Dow Jones industrial average closed up 117.28 at 9,462.90, erasing an earlier deficit of 167 points. The Nasdaq composite index rose 43.93 at 1,775.47 and the Standard & Poor's 500 index was up 14.89 at 1,100.09.

Prices had already started to recover by midafternoon when news came that the Senate had approved a package of anti-terrorism laws by a vote of 98-1. The bill, which Bush is expected to sign into law soon, gives police new and expanded powers to track suspected terrorists.

That news combined with the passage late Wednesday in the House of a $100 billion economic stimulus package led to a turnaround in investor sentiment, which had soured in the morning following the release of several poor economic indicators.

"This is the best kind of rally," said Larry Wachtel, a market analyst at Prudential Securities in New York. "The fact that the economy came to a screeching halt because of the attacks did not come as a big surprise. The stock market has come around to the view that all that steam that was already in the boiler should bring around a recovery by spring of next year."

Even in the morning, some sectors were holding their own despite the poor economic readings on durable goods orders, unemployment, and existing home sales.

Energy shares headed higher after The Williams Cos. surpassed analysts' estimates for the third quarter and raised its forecasts for full-year earnings for 2001 and 2002. Williams' shares were up $1.70 to $27.60 and brought other energy shares higher as well.

Semiconductor shares also rebounded, led by industry bellwether Intel, up 62 cents at $26.10 and Applied Materials, up $2.09 at $37.43. Leading data storage maker EMC was also up 74 cents at $13.22.

Earlier, a pair of dismal economic reports had compounded worries about the fallout from last month's terror attacks to send stocks lower. But as in recent sessions investors absorbed the bad news and focused on good news regarding individual companies.

A surprisingly large drop in orders for durable goods had weighed heavily on the market in the morning, as did poor earnings results from American International Group and WorldCom.

The Commerce Department reported orders plunged in September for the fourth consecutive month. The 8.5 percent decline was far worse than the 1.3 percent dip many analysts had forecast.

The Labor Department also reported that the number of newly laid-off Americans filing for unemployment benefits rose by 8,000 last week to 504,000, the second-highest figure in nearly a decade and a level that is generally associated with recessions.

Thursday's gain means the Dow has won back 1227 points, or 85 percent, of the 1,369 it lost in the first week of trading after the attacks. The Nasdaq is 80 points above its pre-attack level and the S&P 500 is seven points higher than its Sept. 10 close.

The Russell 2000 index, the barometer of smaller company stocks, rose 7.12 to 434.77.

Advancing issues outnumbered declining ones by a 9-to-7 margin on the New York Stock Exchange, where volume came to 1.35 billion shares, slightly above Wednesday's pace.

Overseas, Japan's Nikkei stock average ended the day up 0.7 percent. In afternoon trading, Germany's DAX index was down 2.9 percent, France's CAC-40 fell 2.4 percent percent, and Britain's FT-SE 100 declined 1.6 percent.

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