New York Bargain hunters drove up stock prices Friday, a rare bright spot to mark the end of one of the market's worst quarters in decades.
Investors overlooked signs that the economy has slumped even further and put aside fears about a recession to take advantage of cheaper prices of long-battered tech stocks and recently hard-hit blue chips. Likewise, mutual fund and money managers made end-of-quarter trades selling losers and picking up winners to boost their portfolios' overall first-quarter results.
Despite Friday's moderate gains, analysts cautioned about getting overly optimistic that the market is ready to sustain a rally.
"You are going to hear a lot of talk now that it was such a bad quarter that things have got to get better, but so far nothing has changed," said Gary Kaltbaum, market technician for First Union Securities, noting that earnings and the economy have been crippled severely.
"With the way the economy has fallen off the cliff it is going to take a while to get things going again."
The Dow Jones industrial average rose 79.72 to close at 9,878.78, but still posted its worst first quarter ever in terms of points down 908.07 and its 10th-worst in terms of percentage loss. The 8.4 percent decline for the first three months of 2001 was the Dow's worst first-quarter performance since 1978.
The Nasdaq composite index finished up 19.69 at 1,840.26, after closing Thursday at its lowest level in more than two years. The tech-heavy index fell 25.5 percent during the first three months of 2001, ending its worst-ever first quarter, and is now more than 63 percent off its high of 5,048.62 reached last March.
The Standard & Poor's 500 index gained 12.38 to close at 1,160.33, though it remains in bear market territory, more than 24 percent off its high.
Investors traded cautiously Friday, partly on expectations that earnings will continue to suffer in the coming months, and partly because of a report by the Purchasing Management Association of Chicago, analysts said. The group reported that its index of business activity in the Midwest fell to 35.0 in March, its lowest level since March 1982. Any number below 50 indicates business in the manufacturing sector is contracting.
Analysts had expected a reading of 43.5, slightly higher than the 43.2 level reported for February. The Chicago survey is watched closely for clues to the index of the National Association of Purchasing Management, which is to be released Monday.
Analysts doubted any gains would be long lasting given the fact that companies will begin announcing their first-quarter earnings in about two weeks.