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Stocks Rally as Investors Seek Bargains

Wall Street: Several battered sectors lead the rebound. NYSE trading volume sets record.

July 25, 2002|From Times Staff and Wire Reports

Utilities, chemical companies, financial firms and retailers led Wall Street's spectacular rebound Wednesday, though the stock market's breadth overall wasn't dramatically positive on a day of huge gains in key indexes.

In other markets, Treasury yields jumped from record lows as money left bonds for stocks, and gold slipped. But the dollar lost value despite the surge in equity prices.

At the stock market's opening it looked like another day of heavy losses was in the offing, as the Dow quickly lost 170 points and the Standard & Poor's 500 slumped 22 points.

At its morning low of 775.68, the S&P was down 49.2% from its record high in March 2000. That eclipsed the 48.2% peak-to-trough decline of the 1973-74 bear market, the worst since the Great Depression.

But share prices soon turned around and continued to rally throughout the day.

Analysts said the reversal reflected a number of factors, including the arrest of executives of Adelphia Communications on securities fraud charges, and Congress' agreement on a bill reforming corporate and accounting practices.

Others said the market was simply primed for a huge snap-back, after nine weeks of massive selling that drove many stocks to five-year lows.

By the close, the Dow was up 488.95 points, or 6.4%, to 8,191.29, its second-biggest one-day point gain ever and the biggest percentage gain since 1987.

The S&P index soared 45.73 points, or 5.7%, to 843.43 and the Nasdaq composite leaped 61.18 points, or 5%, to 1,290.23.

The S&P small-cap index jumped 4.7%, cutting its year-to-date loss to 18.1%. The S&P 500 still is down 26.5% this year.

Trading volume set a record on the New York Stock Exchange.

"There is a buying panic," said George Mairs, who manages $700 million at Mairs & Power Inc. in St. Paul, Minn. "People are jumping to get in because they don't want to miss the bottom. No one is prepared to say the bear market has ended, but the magnitude of this rally is very impressive."

Still, winners outnumbered losers by 20 to 13 on the NYSE and by 20 to 15 on Nasdaq, breadth figures that weren't particularly impressive given the gains in key indexes.

Investors' renewed interest in the stock market came partly at Treasury bonds' expense: The yield on the five-year T-note, which hit a record low of 3.46% on Tuesday, rose to 3.52% on Wednesday. The 10-year T-note yield ended at 4.47%, up from 4.41% on Tuesday.

In commodities trading, gold eased further after tumbling nearly $11 an ounce Tuesday. Near-term gold futures fell $1.20 to $311.50 an ounce in New York.

But stocks' gains couldn't help the dollar, which faded after Tuesday's big rally. The euro rose to 99.5 cents from 98.9 cents, while the dollar fell to 116.33 yen from 117.54.

Among Wednesday's highlights:

* Beaten-down utilities were among the day's big winners. Duke Energy surged $3.07 to $22.07, Consolidated Edison leaped $3.18 to $36.76 and Calpine jumped 68 cents to $3.80.

But others continued to fall on worries about the companies' finances. Dynegy slid 25 cents to 98 cents and Reliant Energy lost $2.50 to $5.40.

* Chemical stocks attracted buyers. Sigma-Aldrich shot up $5.01 to $44.81, DuPont jumped $3.23 to $40.28 and Great Lakes Chemical was up $2.83 to $24.47.

* Financial issues rebounded. J.P. Morgan rose $3.22 to $23.30 and Citigroup jumped $2.59 to $29.59, recovering part of their Tuesday losses, when a Senate panel skewered the banks for the help they gave Enron in designing some of its controversial financial transactions.

J.P. Morgan Chief Executive William Harrison said he and Vice Chairman Marc Shapiro were buying stock in the bank because the price was "very, very depressed."

* Among other financial companies, Goldman Sachs gained $3.12 to $70.85, Household International was up $3.68 to $39.97 and Aflac rose $3.98 to $28.73.

* Retailers resurged. Kohl's rocketed $6.30 to $64, Wal-Mart jumped $2.84 to $47.94 and Home Depot leaped $2.57 to $30.72.

* In the technology sector, IBM rose $2.49 to $69.54, Cisco Systems added 59 cents to $13.09, Dell Computer gained $1.50 to $24.24 and Yahoo shot up 92 cents to $13.58.

But AT&T Wireless fell 40 cents to $4.95 and Nextel Communications lost 58 cents to $5.64.

Market Roundup, C6-7

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