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Archive for Tuesday, February 12, 2002

Bargain hunters boost markets

February 12, 2002

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— Wall Street's cheaper prices lured buyers Monday, sending the Dow Jones industrials up by triple digits for the second straight session. But the gains came on light volume, indicating that many investors sat out the rally, still nervous about the economy and corporate bookkeeping.

"(Prices) aren't jumping out at you, but they are looking more attractive, and that has incited some buying," said Hugh Johnson, chief investment officer at First Albany Corp.

The Dow closed up 140.54, or 1.4 percent, at 9,884.78, having risen 118.80 Friday. Analysts said the relatively low trading volume skewed some price changes, making the advance appear more solid than it actually was.

New York Stock Exchange consolidated volume totaled 1.43 billion shares, below Friday's moderate 1.7 billion.

The broader market also closed higher. The tech-focused Nasdaq composite index rose 27.78, or 1.5 percent, to 1,846.66, and the Standard & Poor's 500 index advanced 15.72, or 1.4 percent, to 1,111.94.

The buying built on a rally from Friday, when bargain hunters snatched up cheaper stocks following a five-session selloff. Because buying has been based on price rather than confidence in the economy and corporate earnings, analysts don't expect gains to hold.

"You've had an ugly two weeks, and so now you get a bounce. But there is no volume in this move up, meaning there's no conviction. If the market wanted to turn downward on a dime, it could," said Gary Kaltbaum, market technician for Investors' Edge Partners in Orlando.

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