NEW YORK – Stocks ended in positive territory after another roller-coaster ride Wednesday as investors tried to make sense of a mixed bag of economic and corporate news.
Markets fell early after a flurry of profit warnings from tech firms, including Tellabs Inc. and German chipmaker Infineon AG.
But investors took heart from a key forecasting gauge that showed the U.S. economy in May grew at its fastest pace in almost one-and-a-half years.
The Nasdaq composite index gained 38.6 points to end the day at 2,031.24 -- finishing above the psychologically significant 2,000-point level. The blue-chip Dow Jones industrial average gained 50.66 points to finish at 10,647.33. The Standard & Poor's 500 Index ended up 10.56 points at 1,223.14.
``Hope springs eternal among the market participants after seven or eight bad days,'' said Robert Stovall, analyst at Prudential Securities.
Internet and media giant AOL Time Warner Inc. boosted media stocks after AOL's chief executive told Reuters in an interview that advertising revenues were stabilizing and the company remains on track to meet its 2001 financial targets. Its stock rose $1.65 to $51.50.
``Not all the news out there is negative, or at least not as negative as people had feared,'' said Steve Fossel, a portfolio manager for Berger Associates, which oversees $8 billion.
Honeywell International Inc. dragged on the blue-chip Dow Jones industrial average after the staff of the European Commission recommended that European Union member countries reject General Electric's proposed purchase of the arms contractor.
Sawtek Inc. also helped bolster enthusiasm for stocks after the wireless communications parts maker suggested a bottom in the slowdown has been reached. Its stock rose 10.5 percent to $17.68. The firm, which makes surface acoustic waves that block interference that can affect wireless phone transmissions, added orders were recovering.
Media companies got a boost from AOL's upbeat outlook. Web media and commerce site Yahoo Inc. gained 49 cents to $16.05, while newspaper company New York Times Co. rose $1.16 to $57.20. Viacom Inc. rose $1.52 to $52.81.
Still, stocks pared gains at mid-day. Traders said they doubted even a mild rise was sustainable, given the flood of bad news slamming the economy and stocks.
``The markets were up, but they ran out of steam,'' said Michael Palazzi, a managing director of Nasdaq trading at CIBC World Markets Inc. ``Believe me, the selling is still there.''
Dismal reports from tech companies shook confidence.
Tellabs plunged $4.42, or 21 percent, to $16.82 after the telecommunications equipment maker said it would slash its second-quarter financial outlook as the slumping U.S. economy causes lower equipment-spending by telephone and Internet service customers.
The company said it expects earnings per share to be break-even, far less than the 29 cents expected by Wall Street, according to research firm Thomson Financial/First Call.
German chipmaker Infineon said on Wednesday it would have a loss of up to 600 million euros ($512.4 million) and warned it could not rule out a loss for its full fiscal year as the slumping global economy cuts into demand for its products.
Infineon's American Depositary Receipts slumped $4.24, or 14 percent, to $25.60.
``I'm selling on strength,'' said Uri Landesman, who helps manage $250 million for AFA Management Partners. ``I'd rather be holding cash than holding names I don't expect to see moving for three to four months.''
Zions Bancorp jumped $1.91 to $58.26 after S&P said it would add the financial services company to the S&P 500 index, replacing drug maker Alza Corp. that is expected to be bought by Johnson & Johnson. Alza rose 40 cents to $52.47.
Honeywell dropped $1.41 to $37, while GE shares rose 72 cents to $49.59.
Contract manufacturer Jabil Circuit Inc. lost $1.50 to $58.61 after the maker of personal-computer, communications equipment and other electronics for brand-name companies, forecast sales and earnings could fall in the fourth quarter from the third.
Despite the slew of bad news, some portfolio managers remained positive.
``We've seen the worst of the market declines and I think an 'up' trend is here,'' said Timothy Stevenson, a portfolio manager for Evergreen Investment Management Co. ``There's a belief the Fed will be successful in stimulating the economy, consumer demand remains strong and I think a good bit of time has passed to work through capital spending issues.''
The Federal Reserve has cut interest rates five times this year to jump-start the slumping economy.
Advancing issues outnumbered decliners by slightly more than 3 to 2 on the New York Stock Exchange where consolidated volume came to 1.57 billion shares, compared with 1.40 billion on Tuesday.
The Russell 2000 index, which measures the performance of smaller company stocks, rose 7.13 to 495.86.
Overseas markets were mostly lower Wednesday. Japan's Nikkei stock average closed the day up 0.8 percent. Germany's DAX index fell 0.8 percent, France's CAC-40 fell 0.6 percent, and Britain's FT-SE 100 rose 0.3 percent.
-- The Associated Press and Reuters contributed to this report.
|Respond to the Writer|