Tech buying triggers market rally

AP Business WriterNEW YORK (AP) -- Strength in the technology sector sent stocks soaring Tuesday in a rally that gave investors hope the market's post-Sept. 11 advance still has momentum.

The Dow Jones industrials scored a triple-digit advance as buying gained intensity late in the session. But analysts were skeptical that the market was beginning another extended run upward and noted that there are still few signs that business and the economy are stabilizing.

The Dow closed up 129.88, or 1.3 percent, at 9,893.84, according to preliminary calculations, recovering all of a 87.60 loss the previous session.

Broader indexes also fared well. The technology-focused Nasdaq composite index was up 58.20, or nearly 3.1 percent, at 1,963.10. The Standard & Poor's 500 index gained 14.90, or 1.3 percent, to 1,144.80.

"I'm not seeing any news today that is specifically causing this, but it looks like investors are anticipating better times ahead and saying that 'We better own stocks because the tide is getting ready to turn,"' said Bill Barker, investment strategy consultant with RBC Dain Rauscher.

"It also could be seasonality. December historically is a pretty good month for the market and we usually do get a yearend rally," he said.

The market also got a lift from comments by President Bush, who, speaking to a Florida audience, demanded action from Congress on an economic stimulus package.

Cisco Systems rose 66 cents to $20.52 after the company's chief executive told an analysts meeting November orders met expectations, although he also implied that the company's outlook hasn't changed.

Other tech gainers included Hewlett-Packard, up $1.01 at $22.50, and Ciena, which rose $1.67 to $18.73.

The enthusiasm also helped other sectors. Home Depot rose $1.31 to $47.70 after Merrill Lynch added the stock to its focus list, suggesting it expects strong performance ahead.

Other retail stocks showed strength, too. AnnTaylor Stores rose 65 cents to $29.05.

And Enron rose 46 cents, or 115 percent, to 86 cents on speculation that up to $1.5 billion in new financing from J.P. Morgan Chase and Citigroup would help rescue the energy company, which filed for bankruptcy protection on Sunday. J.P. Morgan Chase gained 67 cents to $37.22, while Citigroup advanced 92 cents to $47.83.

Market watchers cautioned against too much exuberance, however, noting that the fourth-quarter warnings season starts later this month. The risk of political uncertainty also remains significant -- in recent days, the already tense situation in the Middle East has escalated with more fighting between the Israelis and Palestinians.

"People are saying that fourth-quarter earnings aren't going to be what we want them to be, so let's not chase the market," said Robert Harrington, head of listed block trading at UBS Warburg. "The market has moved a lot higher over the last few weeks. We probably will need a little time to go sideways before the rally picks up from here."

Indeed, the market has moved up considerably since making its 2001 low for the year in September, following the terrorist attacks. But that progress has slowed in recent weeks, as investors, unsure the advance would last, sold stocks to lock in profits from the big rally.

They also have been selling when economic reports are negative or mixed and create uncertainty about the timing of an economic recovery. For example, reports Monday showed personal income and manufacturing slumping in October, while personal spending and construction activity improved.

As a result, the Dow has been unable to stay above 10,000 and the Nasdaq is still below 2,000. Analysts say the market appears to be mired in a range, trading above its September lows, but unable to get back to where it was this summer.

Even the prospect of an interest rate cut -- the 11th such move of the year -- by the Federal Reserve next week isn't expect to help stocks move much higher. Analysts say that reduction is already reflected in the market. Selling pressure could also gain momentum late in the month as investors sell stocks for tax purposes.

Advancing issues led decliners more than 2 to 1 on the New York Stock Exchange. Volume came to 1.29 billion shares, ahead of the 1.20 million reported Monday.

The Russell 2000 index was up 10.81 at 4657.84.

Overseas, Japan's Nikkei stock average rose 0.8 percent. In Europe, Germany's DAX index gained 0.5 percent, Britain's FT-SE 100 advanced 0.9 percent, and France's CAC-40 climbed 1.5 percent.

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