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Dow Surges Up 255 Points

Wall Street reveled in stunning gains again Thursday as the Dow Jones industrials surged up 255 points, giving the blue chips their first three-day, triple-digit winning streak in 17 months.

In three sessions, the Dow has netted nearly 670 points. But the market's run-up failed to dazzle analysts, who attributed it largely to technical factors rather than a turnaround in investor sentiment or business fundamentals.

Analysts were guarded, refusing to declare that Wall Street had finally bottomed out and was on a new upward path, and saying that investors remain nervous about committing to stocks.

"There is still a very high level of anxiety on both sides," said Ned Riley, chief investment strategist at State Street Global Advisors. "There is anxiety that people are going to miss something spectacular on the upside, and there is anxiety that they are going to be caught in a vicious vortex of a bear market."

The Dow closed up 255.87, or 3 percent, at 8,712.02. Combined with triple-digit gains in the previous two sessions, the Dow has climbed about 668.39 in three days. The Dow had not seen three consecutive triple-digit wins since gaining 558 points in the three sessions that ended March 27, 2001.

As substantial as the Dow's three-day performance was, it was diminished by the triple-digit selloffs in the prior three sessions. Basically, the Dow is back to where it stood at the beginning of last week.

The broader market also finished higher. The Standard & Poor's 500 index rose 28.69, or 3.3 percent, to 905.46, for a three-day advance of 70.86.

The Nasdaq composite index advanced 35.62, or 2.8 percent, to 1,316.52, for a three-day gain of 110.51.

Wall Street welcomed the positive streak following last week's string of weaker-than-expected economic data, which raised fears that the economy was slipping back into recession. Analysts say the market is somewhat soothed by the possibility that the Federal Reserve will cut interest rates further at next week's meeting or in September.

"The feeling is the Fed will be there with a safety net," said Alan Ackerman, executive vice president at Fahnestock & Co.

But analysts also cautioned against getting too enthused by Wall Street's buying spree, crediting much of it to technical factors such as short-covering. In short-covering, investors who sold stock figuring the market was going to keep falling are forced to buy shares to cover their bets when the market turns higher.

"What is happening is more short-covering in a down market. I don't think we have really seen the bottom," said Al Mirman, strategist at V Finance in Sarasota, Fla. "We are having short-term upswings in a down market. ... And, quite frankly, we could see some difficult times for the balance of the year."

Among Thursday's winners, Citigroup climbed $2.38 to $33.90 after announcing it will begin charging stock options as an expense against earnings. Several companies, including General Motors and General Electric, have announced they will count options as expenses.

Intel rose 66 cents to $18.38 after saying it would not charge stock options as a regular quarterly expense, but would provide more details about its stock-option programs.

Retailing shares were mixed Thursday following reports that meager inventories and skittish consumers pinched July sales at many stores.

AnnTaylor rose $2.23 to $26.36 after raising its outlook for the second and third quarters. And Urban Outfitters surged $3.76 to $24.69 after it reported that same-store sales — those at stores open at least one year — rose 11 percent and raised its second-quarter earnings forecast.

But Best Buy plunged 36.5 percent, down $11.25 at $19.55, after cutting its second-quarter earnings outlook, citing flat same-store sales for the past four weeks.

Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange. Volume was moderate at 1.63 billion shares, compared with Wednesday's 1.49 billion shares.

The Russell 2000 index, the barometer of smaller company stocks, rose 6.37, or 1.7 percent, to 389.84.

Overseas, Japan's Nikkei stock average finished Thursday down 0.4 percent, while stocks rose sharply in Europe. France's CAC-40 and Britain's FTSE 100 each rose 3.6 percent, and Germany's DAX index surged 6.2 percent.

The market has gotten a boost this week from hopes the U.S. Federal Reserve may cut interest rates sometime this year, after a string of tepid economic reports showed the recovery may have hit a roadblock.

Results from network gear maker Cisco Systems Inc. earlier in the week also helped restore some optimism to the technology group.

"There's the thought the Fed is going to ease and that's a positive, then you had Cisco come through with OK earnings and Brazil has helped the whole financial group," said Alan Loewenstein, co-manager of the $400 million John Hancock Technology Fund. "At the (market) close, we've been seeing stocks get stronger instead of weaker. That signifies constant buying power."

Fewer Americans than expected signed up for state unemployment benefits last week, the government said in another report Thursday that showed a slowly improving U.S. labor market.

Technicians say support -- where buyers are expected to swoop in -- is at 1,240 for the Nasdaq, 7,800 for the Dow and 840 for the S&P. Resistance -- the point where sellers are likely to emerge -- is at 1,350 for the Nasdaq, 8,900 for the Dow and 940 for the S&P, according to research firm Schaeffer's Investment Research.

The levels are key elements of technical analysis, which studies prices, volume and charts.

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