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Archive for Saturday, February 23, 2002

Bargain hunters lift markets

February 23, 2002

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— Lured once more by lower prices, buyers returned to Wall Street late Friday, shrugging off earlier concerns about a profit warning from Circuit City and a federal probe into Computer Associates' books. Rising blue chips lifted the Dow Jones industrials more than 130 points and tech stocks managed a modest advance.

But analysts don't expect the gains to hold, based on the market's fluctuations so far this year and investors' ongoing worries about corporate earnings and accounting.

"The real question is: Is it sustainable? And the answer is no," said Hugh Johnson, chief investment officer at First Albany Corp.

The Dow Jones industrial average finished up 133.47, or 1.4 percent, at 9,968.15, having fallen 106.49 Thursday.

Friday's late advance put the Dow in positive territory for the week with a gain of 65.11, or 0.7 percent. But the Nasdaq fell for the fourth straight week, down 80.66, or 4.5 percent. The S&P 500 lost 14.34, or 1.3 percent.

Upbeat earnings news and analyst ratings helped lift some stocks Friday. General Motors rose $1.38 to $53.11 after Banc of America Securities upgraded the shares to "buy" from "market perform."

Chipmaker Xilinx advanced 92 cents to $34.93, after raising its fourth-quarter revenue estimate late Thursday.

But investors have been mostly selling stocks for the last six weeks, worried that the economic recovery would be further delayed. They've also become suspicious that companies are not accurately reporting their earnings, in the wake of Enron's collapse.

Technology has endured the strongest selling so far this year, which analysts attribute to the sector's relatively high prices. While the Dow is down about 0.5 percent this year, the tech-focused Nasdaq has dropped nearly 12 percent.

Analysts also said investors were worried about the accounting at tech firms, which often is more complicated than that of more basic blue-chip industries.

Computer Associates fell $2.91, or 15.4 percent, to $15.99 after the software maker confirmed it was being examined by federal investigators. The investigation reportedly focuses on whether the firm deliberately overstated earnings.

Accounting worries drove J.P. Morgan Chase down 95 cents to $28.19 after The Wall Street Journal reported Friday that the Federal Reserve Bank of New York was looking into the bank's books for commodity-related trades with Enron.

"If there is any hint of impropriety, investors are pulling the trigger, and asking questions later," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif.

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