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Investors snapping up bargains and a positive outlook from GE helped the Dow recoup most of its loss from Tuesday.
©Associated Press
September 26, 2002
NEW YORK -- Bargain hunters surfaced on Wall Street on Wednesday, sending stocks sharply higher after two days of steep declines that left blue chips and tech shares at four- and six-year lows.
"The markets coming in today were considered somewhat oversold, so you had a reflex rally," said Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn. "A lot of companies are now stating they were affirming forecasts and that led to a little reprieve."
The Dow Jones Industrial Average rose 158.69, or 2.1 percent, to close at 7,841.82. The gain erased most of an 189-point drop Tuesday that sent blue chips to a four-year low.
The broader market also finished sharply higher. The Nasdaq composite index climbed 40.12, or 3.4 percent, to 1,222.29, having declined 3 points in the previous session to a six-year low. The Standard & Poor's 500 index gained 20.37, or 2.5 percent, to 839.66.
General Electric rose $1.28 to $27 after the company said it would affirm its third-quarter earnings estimate at an analysts' meeting today. Ford climbed 63 cents to $9.97 after the automaker said it will increase fourth-quarter production due to strong sales.
But analysts discounted Wednesday's rally as likely to be short-lived. They say investors have grown increasingly pessimistic about the strength of the economy in the past month because of mixed economic reports and earnings warnings.
Since hitting a peak on Aug. 22, the Dow has lost about 1,200 points. It had not seen a triple-digit closing gain since Sept. 6, when blue chips rose 143.50 points.
"We're in such a tough market sentiment period of time where negative news is really the only thing that sticks to the wall," said Tim Leach, chief investment officer for Wells Fargo's Private Client Services. "We're not out of the woods."
Goldman said he expected continued trading volatility, particularly as investors fret about a possible war with Iraq.
"It will be a choppy environment over the next few weeks with some etching out of the bottoming process," he said. "In general, there's a lot of skittishness, and the war doesn't add much to the equation. On a short-term basis, it puts a cloud over the market."