Archive for Thursday, August 23, 2001

Bargain shoppers boost markets

Stocks rise for firms with rosy outlook

August 23, 2001

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— Placing some bets despite their worries about the economy, bargain-hunting investors sent the stock market higher Wednesday.

Wall Street enjoyed a solid advance by late afternoon after investors spent much of the day pondering what the Federal Reserve's seventh interest rate cut would mean for the economy. The market alternated between worries that Tuesday's quarter-point cut wouldn't be enough to reinvigorate the economy and relief that the central bank didn't think the economy needed a bigger cut.

The Dow Jones industrial average finished a choppy session up 102.76 at 10,276.90, recovering most of the 145 points it lost Tuesday.

"Contrary sentiment was getting overdone," said Steven Goldman, market strategist for Weeden & Co.

The broader market also advanced. The Nasdaq composite index rose 28.71 to 1,860.01, and the Standard & Poor's 500 index gained 8.05 to end at 1,165.31.

But buyers likely were prompted by cheaper prices from Tuesday's selloff rather than optimism about an economic turnaround in the near future, analysts said. The Fed did not predict that business would improve soon, leading investors to sell stocks across sectors Tuesday. And analysts also don't expect any gains to be long lasting until companies can say business is improving.

"There was a lot of hope that the Fed would say they are about done easing (rates), because the economy is showing strength. But they basically said we continue to see weakness," said Richard Dickson, a technical analyst at Hilliard Lyons in Louisville, Ky. "We are looking for some indication that the economy has bottomed out."

Dow industrial General Motors climbed $1.50 to $57.20 after affirming its third-quarter earnings outlook.

The tech sector got a boost from semiconductor equipment makers, which reported better-than-expected July sales $764 million in orders in July.

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