Big Board Bliss

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A wave of bargain hunting revived stocks Tuesday, sending the Dow Jones industrials up more than 200 points as investors sought to capitalize on three sessions of sharp losses.

The Dow closed up 230.46, or 2.9 percent, at 8,274.09, after rising as much as 374 earlier in the session. It was the average's first triple-digit gain in more than a week and followed a three-day, 692-point losing streak.

The market's broader stock indicators also closed higher, despite some pullback late in the session. The Standard & Poor's 500 index climbed 24.97, or 3.0 percent, to 859.57, and the Nasdaq composite index rose 53.44, or 4.4 percent, to 1,259.45.

Some of the biggest gains were in the financial and technology sectors, both of which have suffered recently on economic reports suggesting that business is slowing rather than recovering. Still, analysts were skeptical.

"After a handful of days of selling off, we were probably due for a little bit of bounce. But this is nothing that you want to start pounding the table and shouting that the new bull market has begun," said Charles White, portfolio manager at Avatar Associates.

Investors were also hoping that the Federal Reserve will fire off another interest-rate cut to pump up the economy.

"We are getting some talk of further rate cuts by the Fed, and that is certainly helping the market," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Banking, which oversees $7 billion. "People are hoping additional rate cuts are going to help the economy and save us from going into another recession."

Analysts had expected some buying following the market's big losses over the past few sessions, but the extent of Tuesday's surge caught many by surprise.

Still, it wasn't clear whether the gains represented a true rally or just a rebound. In the past two years, Wall Street has repeatedly rallied only to pull back on later selling. The Dow rose 1,009 points in late July, only to give back roughly two-thirds of that by the end of trading Monday.

On Tuesday, Cisco rose $1.15 to $12.51 ahead of an earnings report due out after the market closes. The stock had dropped sharply Monday because of anxiety that the results might be disappointing.

Other tech stocks also fared well, including Advanced Micro Devices, which rose 93 cents to $8.50, and Oracle, up 57 cents at $9.58.

Financial stocks, which had pulled back on concerns about the banking industry and financial crises overseas, also rebounded. J.P. Morgan rose $1.82 to $24.17, while Citigroup advanced $2.80 to $31.45.

AOL Time Warner rose 2 cents to $9.97 on news that it had named former cable TV executive Jonathan Miller as head of its America Online division. The division has come under scrutiny amid its falling stock price and questions about its accounting practices.

Tuesday's upturn cut short a three-session losing streak on the market that had sent the Dow briefly back below its lowest post-terrorist attack of 8,235.81 and the Nasdaq to a new five-year low.

Analysts welcomed the advance, but were hesitant to read much into it — noting that nothing fundamental has changed from the conditions that provoked the most recent declines. Economic data suggesting that business is slowing have yet to be disproved, and most companies' forecasts for the future are cautious.

They also note that Wall Street has a history of rallying but being unable to sustain the gains. The volatility has been especially intense this summer, with the major indexes alternating between sharp declines and advances.

Retail sales figures due out Wednesday could provide some catalyst for buying if the results are stronger than expected. Wall Street is also hoping that the Federal Reserve will decide to further lower interest rates at its next meeting. But until that happens, the fluctuations will likely continue.

"The market is going to have to prove to investors that it can hold onto a gain for some time before you're going to have a lot of believers," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "I'm not sure I'm a believer myself, at least in this bounce."
  • Dan Collins

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