Stocks see sharp spike following NYSE merger

NEW YORK -- Stocks staged a stunning rebound Thursday as investors snapped up shares on unexpectedly strong earnings from companies including Nokia Corp. and Motorola Inc., and the surprising news that the New York Stock Exchange plans to merge with electronic trader Archipelago Inc. The Dow Jones industrial average soared more than 200 points, its best day in two years.

Bargain-minded buyers jumped back into the market a day after concerns about inflation sent stocks sharply lower. Thursday's session began with brisk trading, which some analysts worried wouldn't last, but with money flowing out of bonds, Wall Street grew more confident about the prospects for equities after last week's heavy losses.

"Obviously the market is oversold when you get multiple days of 100-point sell-offs," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. "I think the market got flushed out ... everybody was frightened. When everyone starts seeing the glass as half-empty, it's just panic in the streets. But once we get through earnings, I just see nothing but gradual upside for the rest of '05."

The Dow surged 206.24, or 2.06 percent, to 10,218.60, reversing course after a 115-point drop Wednesday, and a 374-point decline last week. It was the Dow's largest one-day gain since April 2, 2003, when the blue chips closed 215.20 points higher.

The broader gauges also posted significant advances. The Nasdaq composite index soared 48.65, or 2.54 percent, to 1,962.41, its best one-day gain since Nov. 24, 2003, when it closed up 53.26 points. The Standard & Poor's 500 index added 22.45, or 1.97 percent, to 1,159.95, its best one-day showing since March 17, 2003, when it climbed 29.52.

As stocks rose, Treasury prices declined, with the yield on the 10-year note rising to 4.30 percent, up from 4.19 percent late Wednesday. The dollar was up against other major currencies; gold was mixed. Crude oil settled 17 cents higher at $54.20 on the New York Mercantile Exchange.

Despite the day's robust trading, however, some analysts were reluctant to declare an end to the slide that started last week, warning that the market has had a hard time sustaining its rallies.

"The market is still jittery," said Jay Suskind, head trader at Ryan Beck & Co. "You're seeing strong earnings numbers, there's good visibility on the corporate side, but lousy macro-economic numbers for March, and that's the big quandary. I think we need really another month or so of macro numbers to know whether March was just an economic soft patch, or not."

The number of Americans filing new claims for unemployment benefits plunged by 36,000 last week, the biggest drop in more than three years. Labor Department analysts cautioned that the drop was overstated, however, because the normal seasonal adjustment process used to calculate claims was skewed by the early Easter holiday.

Separately, a closely watched index forecasting future business activity fell in March, a sign that the nation's economic growth may be slowing. The Composite Index of Leading Economic Indicators fell 0.4 percent last month to 115.1, according to the Conference Board. Economists had expected a 0.3 percent decline.

All areas of the market posted gains, according to the exchange-traded funds that track the nine sectors of the S&P. The top performers were energy, which rose 3.45 percent; industrials, up 2.67 percent; and technology, up 2.7 percent. The weakest areas were utilities, up 0.89 percent, and financials, which rose 0.58 percent.

On the Dow, the best-performing components included Altria Group Inc., which rose 4.1 percent, or $2.56, to $65.31; Walt Disney Co., up 3.9 percent, or $1.05, at $27.67; and Microsoft Corp., up 4 percent, or 96 cents, at $25.28.

Archipelago rocketed higher, up 59.7 percent, or $11.20, at $29.96 on the Pacific Stock Exchange, a day after the New York Stock Exchange announced plans to merge with its all-electronic rival exchange. The move, which took Wall Street by surprise, will transform the NYSE into a for-profit, publicly traded enterprise.

In earnings news, Nokia gained 6.6 percent, or $1.01, to $16.35, after reporting double-digit growth in the first quarter and raising its earlier estimate of the global mobile handset market in 2005. Its rival, Motorola, also had better-than-expected results on a solid rise in sales; Motorola was up 6.7 percent, or $1.00, at $15.93.

Google Inc., which rose 3.1 percent, or $6.12, to $204.22 in regular trading, beat Wall Street estimates after the bell with a nearly six-fold surge in profits. The online search engine leader earned $1.29 per share on $794.5 million in revenue, subtracting commissions paid to its advertising network. The results easily topped the 92 cents per share forecast by analysts in a Thomson Financial survey. Google surged another 9 percent in after-market trading, up $18.71 at $222.93.

Advancers outnumbered declining issues by about 3 to 1 on the New York Stock Exchange. Consolidated volume came to 2.35 billion shares, compared with 2.24 billion traded Wednesday.

The Russell 2000 index, which tracks smaller company stocks, was up 14.02, or 2.40 percent, at 598.98.

Overseas, Japan's Nikkei stock average slid 0.94 percent. In Europe, France's CAC-40 rose 0.03 percent, Britain's FTSE 100 fell 0.05 percent and Germany's DAX index was up 0.36 percent.

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