Dow Closes Up 447 Points
Galvanized by hopes that the market's worst days are over, investors bought stocks enthusiastically Monday, sending the Dow Jones industrials surging more than 400 points for the second time in four sessions.
The Dow also logged its third-largest one-day point gain.
The stunning advance, which saw the Nasdaq composite index rise more than 60 points, followed the market's first really upbeat week in more than two months. Analysts believe investors, growing less worried about earnings and corporate bookkeeping, are ready to buy again.
After rising more than 420 points, the Dow closed up 447.35, or 5.4 percent, at 8,711.74, according to preliminary calculations. That followed Wednesday's 488.95-point win; it was also the third-highest one-day advance, after the 499.19-point gain of March 16, 2000.
"Investors are just realizing that the market looks pretty cheap today," said John C. Forelli, portfolio manager for Independence Investment LLC in Boston.
"We are so technically oversold, this is a bounce back," said Jeff Kleintop, chief investment strategist at PNC Advisors, which oversees $65 billion. "We were all a little surprised by how there wasn't a lot of selling going into the end of the week. It looks to me like we are working our way through retail investor capitulation, and that's great news."
The broader market was also higher. The Nasdaq composite index rose 67.28, or 5.3 percent, to 1,329.40, having gained 27 on Friday. The Standard & Poor's 500 index advanced 41.83, or 4.9 percent, to 894.67, following Friday's 14-point gain.
Analysts were encouraged by the market's ability to shake off the latest report of accounting problems, this time at Qwest Communications, which said it was restating results for 2000 and 2001. Qwest, which also withdrew its 2002 financial forecast, slipped 3 cents to $1.47 but didn't impede the market's upward progress.
But for the market to sustain an advance, analysts say the bookkeeping scandals must end and companies must be made to face tougher punishments.
The lure of cheap stocks, however, was enough to make investors shrug off the latest accounting problems. Wall Street largely disregarded an announcement from local phone company Qwest Communications International Inc. that it would restate financial results because it improperly booked $1.16 billion.
Some market observes said they were concerned the market was going from cheap to pricey too quickly. Since Tuesday, when the Dow suffered a four-session loss of 840.14 and closed at 7,7702.34, the Dow has gained about 900 points.
"You have to be pretty quick to take your gains, and not assume the market is going to go straight up," said Susan L. Malley, chief investment officer for Malley Associates Capital Management.
Monday's gains were seen across most market sectors, in keeping with how widespread the recent sell-off had been.
IBM climbed $4.09 to $70.49, General Motors advanced $2.48 to $45.53, and Citigroup rose $2.41 to $33.15.
Cardinal Health rose $3.45 to $55.95 on after Credit Suisse First Boston upgraded it to "strong buy" from "buy."
Retailers were also among Monday's winners with Williams-Sonoma rising $2.49 to $26.05 on an upgrade to "buy" from "market perform" by Lehman Brothers. Tommy Hilfiger advanced $1.18 to $13.38 on fiscal first-quarter earnings that were 3 cents higher a share than expectations.
Analysts say investors are starting to feel more comfortable about buying stocks after pummeling prices to five-year lows over the past 10 weeks. But analysts caution that the market will have a difficult time holding its gains until earnings outlooks sufficiently improve and accounting becomes more dependable.
"It has been a trading market, and it will probably still be a trading market. It won't be straight up," Malley said. "We're still going to have lots of bumps."
Advancing issues outnumbered decliners more than 4 to 1 on the New York Stock Exchange. Volume came to 1.38 billion shares, compared with 1.39 billion traded at the same point Friday.
The Russell 2000 index, the barometer of smaller company stocks, rose 16.30, or 4.3 percent, to 398.56.
Overseas, markets were higher Monday Japan's Nikkei stock average closing up 0.8 percent. Stocks rose sharply in Europe. France's CAC-40 surged 7.0 percent, Britain's FTSE 100 climbed 4.6 percent, and Germany's DAX index soared nearly 7.9 percent.