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Markets rally after a report shows layoffs may be stabilizing.
©Associated Press
January 10, 2003
NEW YORK -- Wall Street bounced back Thursday after a drop in jobless claims raised hopes that the economy is indeed recovering. The Dow Jones Industrial Average rose 180 points, erasing a loss of 178 over the previous two sessions.
Analysts said investors also were heartened by strong sales from softwaremaker SAP and a bullish outlook from Foundry Networks, giving a boost to tech shares.
"The news on balance is fairly good," said Hugh Johnson, chief investment officer at First Albany Corp. "There are small data points or factoids that seem to help the case for a bull market. Confidence is beginning to improve."
The Dow surged 180.87, or 2.1 percent, to close at 8,776.18.
The broader market also finished sharply higher. The Nasdaq composite index climbed 37.39, or 2.7 percent, to 1,438.46. The Standard & Poor's 500 index gained 17.64, or 1.9 percent, to 927.57.
The advance continued a pattern of choppy trading, with big gains followed by big drops, that has marked the new year on Wall Street. Investors have collected profits on uncertainty about the economy and corporate earnings, only to turn around and again start buying when they hear better news.
On Thursday, the Labor Department reported new claims for unemployment benefits fell by a seasonally adjusted 19,000 to 389,000, the lowest level since Dec. 21, offering hope that layoffs might be stabilizing.
"The biggest driver today is the jobless claims number," said Robert Froehlich, chief investment strategist for Deutsche Asset Management in Chicago. "The 400,000 mark is such a threshold number to traders, there's a psychological impact when it falls below that."
Comments by the chief U.N. weapons inspector that there were no "smoking guns" in Iraq's weapons report also might have soothed investors fearing an imminent war, analysts said. Still, Hans Blix said Iraq's 12,000-page weapons declaration left many questions unanswered.
SAP rose $1.66 to $24.15 after Europe's largest software maker reported strong fourth-quarter license sales that beat market expectations. That helped boost other tech companies, including Oracle, which rose 89 cents to $13.01, and Microsoft, which climbed $1.57 to $55.81.
Foundry Networks climbed $1.28, or 15.7 percent, to $9.43 after the computer networking equipment maker said it expects fourth-quarter earnings to meet analysts' expectations.
Analysts think investors are largely upbeat about the market prospects, particularly after President Bush proposed cutting taxes by $674-billion over 10 years, including a plan to eliminate the federal tax investors pay on stock dividends.