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Little economic news allows investors to breathe after a brutal 10-day slide that saw the Dow lose 13.5 percent.
Compiled from Times wires
© St. Petersburg Times, published March 24, 2001
NEW YORK -- Wall Street ended a horrific two weeks with a show of strength Friday, boosting the Dow Jones industrials by 115 points and extending Thursday's late rebound from a nearly 400-point drop. Technology stocks, now seen as some of the best buys in the market, led the advance.
But while the Dow's rise was encouraging, analysts said it was unlikely the stock market's slide had indeed hit bottom Thursday.
"Let's not mistake this for a beginning of a bull market move," said Charles White, portfolio manager at Avatar Associates. "It's a Friday with no economic reports and little news in the marketplace. There's not too much to be made of what's going on today."
The Dow rose 115.30 to close at 9,504.78, wiping out the remaining damage from Thursday's slide, which saw the average fall 380 points before finishing 97 points lower.
But the Dow remained quite wounded. Coming into the day, the index had lost 1,468.77, or 13.5 percent, over the prior 10 trading sessions, including its biggest-ever weekly point decline, the 821.21-point, or 7.7 percent, slide it suffered last week.
The measure of 30 blue-chip companies even slid to bear market during Thursday's sell-off, reaching a 20 percent drop from the index's high of 11,722.98 on Jan. 14, 2000. And it lost 318.63, or 3.2 percent, this week.
"I think these kind of market swings are going to be typical," said David Henwood, chief investment officer for Raymond James & Associates. "Is there anything out there on the horizon to cause you to believe there's any sustainability to it?"
The Dow, which until last week was resilient to the massive sell-offs that devastated the Nasdaq and technology stocks over the past several months, has been stricken by fears the weakening economy is taking a heavy toll in other industries.
In part, the stock market's newfound strength seemed to reflect a sort of afterglow following the Dow's brilliant rally Thursday afternoon. Enfeebled all week after the Federal Reserve disappointed investors Tuesday with a widely anticipated interest-rate cut of half a percentage point instead of the three-quarters of a point cut many had sought, blue-chip stocks plunged most of Thursday. The Dow traded well below 9,378, a point 20 percent below its bull-market high that would have indicated a bear market at the close of trading.
The overall market did look better Friday. The Nasdaq Composite Index rose 30.98 at 1,928.68, although it is still down nearly 62 percent from its own high of 5,048.62 reached March 10, 2000. For the week, the Nasdaq advanced 37.77, or 2 percent.
"I think these kind of market swings are going to be typical. Is there anything out there on the horizon to cause you to believe there's any sustainability to it?" -- DAVID HENWOOD
Wall Street's broadest measure, the Standard & Poor's 500, rose 22.25 to 1,139.83, leaving it down 1 percent for the week. The S&P 500 has lost more than a quarter of its value since peaking at 1,527.46 a year ago.
High-tech issues, beaten down so badly until recently, were the market leaders Friday, but it was likely their low prices made them look more attractive -- not any shift in market sentiment about a sector still seen as risky.
IBM helped lead the Dow's advance, rising $4.58 to $93.68. Microsoft was up $2.56 at $56.56. And cellphone manufacturer Nokia rose $1.37 to $26.37 after announcing plans to buy back up to $50-million worth of stock.
The average also drew strength from its financial components, which had fallen sharply as investors worried about a global economic slowdown. J.P. Morgan Chase gained $2.80 to $41.71; Citigroup rose $2.25 to $42.85; and American Express picked up $2.10 to $36.80.
There were still signs the market has plenty to worry about, and that blue chips, once seen as safe havens in a weak economy, are vulnerable to declines.
Procter & Gamble, another Dow stock, fell $2.55 to $60.20 after announcing Thursday it was slashing 9,600 jobs to restore long-term growth. General Motors fell 17 cents to $52.13, taking some punishing for announcing Wednesday it will temporarily halt operations at more plants as it reduces bloated vehicle inventories.
Those seeking to divine the sector's earnings prospects seemed unfazed by Motorola's announcement it would lay off 4,000 workers. The struggling wireless phonemaker already had announced 18,000 job cuts this year. Its shares rose 31 cents to $15.99.
"The market still appears to lack confidence and conviction," said Alan Ackerman, market strategist for Fahnestock & Co., a brokerage firm. "Corporate earnings visibility keeps getting pushed further and further back."
Analysts said investors were split over whether the rally would instill enough confidence to continue the buying next week.
"They're not all on the same side of the fence," said Eugene Mintz, a financial market analyst and vice president at Brown Brothers Harriman & Co. Some investors may be inclined to play it safe or sell, while "others are saying, "These are good companies. I'm going to buy,' " he said.
Many cautious investors are dealing with their fears by putting their money in bonds, CDs, money markets or even savings accounts.
"I feel paralyzed, frozen, kind of not sure what to do. But I don't think about cashing out or getting out of the stock market or my mutual funds," said Jason Wolfe, a Maine public relations executive.
- Information from the Associated Press and New York Times was used in this report.