New York — Bargain hunting propelled stocks sharply higher Thursday after better-than-expected results from Yahoo! renewed hopes that business might be improving after all.
Analysts said investors were lured by lower stock prices, particularly in the tech sector, following Wednesday's selloff. Wall Street also bet that Microsoft and IBM would issue bullish forecasts, but investors were disappointed when both companies indicated after regular trading ended that conditions remain difficult.
The Dow Jones industrial average closed up 137.77, or 1.4 percent, at 9,850.04, rebounding from a 211-point loss the previous session.
Broader stock indicators also advanced.
Although the gains were significant, analysts were quick to note they followed losses in six of the last eight sessions.
"We have a tug of war going on here. The bullish case is that the outlook is brightening. The bears would say that the market ... is extended and a little bit expensive," said Robert Streed, portfolio manager of Northern Select Equity Fund. "What we really will need to resolve this is some broader-based evidence of which companies are actually going to come through and deliver strong earnings."
In trading Thursday, investors bid Yahoo up $2.25, or 12.6 percent, to $20.12 on better-than-expected earnings and an indication that its ad market appears to have stabilized. Stronger-than-anticipated results from Compaq sent its stock up 70 cents to $11.80, a 6-percent gain.
But after the market closed, investors got a reminder of how murky the technology picture is. A cautious outlook from Microsoft sent its stock down $1.56 to $68.30 in extended trading, despite a $1.99 gain during the day and earnings that, excluding a one-time charge, exceeded estimates.
IBM posted results that beat expectations, but the company indicated that business, while strengthening, is still tentative. The stock fell $5.30, or 4.4 percent, to $114.66 in the after-hours session, reversing a gain of $2.65 during the day.
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