DOW UP 170 POINTS: The Dow's biggest one-day jump since Oct. 1 provides reassurance, but analysts aren't sure if the market correction is over.
By Associated Press
Published March 26, 2004
NEW YORK - A solid reading on the economy gave investors some badly needed reassurance Thursday, propelling the Dow Jones industrials up 170 points and the Nasdaq composite index up 3 percent.
But analysts were divided over whether the rally signaled an end to Wall Street's correction or was simply fueled by bargain-hunting.
The market has been in a corrective phase for about nine weeks, weighed down by a number of factors, from concerns over high stock valuations to fears about global terrorism. While it was not clear whether the advance would be sustained, the worst is probably over, said Alfred Goldman, chief market strategist with A.G. Edwards Inc. in St. Louis.
"We think the correction has probably done its dastardly deed and the primary trend remains up," Goldman said. "I would advise people who are on the sidelines to do some selective buying."
The Dow rose 170.59, or 1.7 percent, to 10,218.82, after declining more than 250 points over the past five sessions. It was the Dow's biggest one-day point change since Oct. 1, when it added 194.14 to close at 9,469.20.
The broader gauges were markedly higher. The Nasdaq soared 57.69, or 3.0 percent, to 1,967.17. It was the biggest one-day change on the Nasdaq since Sept. 24, when the index fell 58.02 points, or 3.1 percent, to 1,843.70.
The Standard & Poor's 500 index gained 17.86, or 1.6 percent, to 1,109.19. It was the S&P 500's most significant one-day move since Oct. 1, when it rose 22.25 to close at 1,018.22.
Investors got some solace before the market opened when the Commerce Department confirmed estimates that the economy grew at a solid 4.1 percent annual rate during the last quarter of 2003. The gross domestic product is considered the most important barometer of the economy's health.
Wall Street forecasts call for 4.5 percent GDP growth through the first half of this year, as tax incentives motivate consumer and business spending. But that level of growth might not be sustainable if the labor market doesn't improve dramatically.
While there was nothing in the day's economic news to discourage investors, there was no evidence to suggest the recovery was accelerating. With the next market-moving data, the March employment report, still a week away, and first-quarter earnings not due until next month, it was unclear what would compel a move higher, and analysts were wary of attaching too much significance to the day's advance.
"Obviously we put in a wonderful sort of a rebound day," said Ken Tower, chief market strategist for Schwab's CyberTrader. "But it's still an open question whether this is just a snap back from a market that was oversold, or whether this is really the beginning of a more sustainable uptrend."
Among the top performers, Avon Products Inc. gained $4.78, or 6.8 percent, to close at $75.35, after raising its profit estimates for the first quarter on strong sales of beauty products.
Nokia Corp. rose 59 cents to $20.13 after the company announced plans to introduce 40 new phone models, and add research and development staff.
Semiconductor firms led the gains in tech. Lattice Semiconductor Corp. gained 26 cents to close at $8.98 after raising its sales forecast for the current quarter. The Nasdaq index was boosted by Dow component Microsoft Corp., which rose 78 cents to $25.19 a day after European regulators ruled against it in a closely watched antitrust case.
Apple Computer Inc. added $1.37, or 5.4 percent, to close at $26.87 after saying it would have to postpone the overseas launch of the smaller version of its iPod music player because of unexpectedly strong U.S. demand.
Losers on the Nasdaq included Micron Technology Inc., down 25 cents at $15.56 after reporting a second quarter loss after the market closed Wednesday.
Advancing issues outpaced decliners more than 3 to 1 on the New York Stock Exchange. Consolidated volume came to 1.98-billion shares, compared with 1.94-billion shares traded Wednesday.
The Russell 2000 index, which tracks smaller company stocks, closed up 13.90, or 2.5 percent, at 571.53.
