NEW YORK – Stocks notched solid gains Wednesday, with the Dow industrials climbing to a 1-month high, after the January retail sales report showed a surprising surge and some tech bellwethers hinted at an uptick in the chip industry.
The Dow Jones industrial average, logging its third triple-digit gain in four days, shot up 125.93 points, or 1.28 percent, to 9,989.67, racking up its highest close since Jan. 10. The tech-packed Nasdaq composite index gained 24.95 points, or 1.36 percent, to 1,859.16, and the broad Standard & Poor's 500 index rose 11.01 points, or 0.99 percent, to 1,118.51.
After a rash of accounting scandals that put Wall Street on watch for the next potential blow-up, investors turned their focus to signs that the sluggish economy is beginning to regain speed, analysts said.
Retail sales "are what's really got people thinking about economic growth again and not thinking about accounting issues or Enron," said Nat Paull, portfolio manager at New Amsterdam Partners.
Technology shares also got a boost after tech bellwether Applied Materials Inc. hinted semiconductor revenues may have reached bottom and said it expected growth in the second half of 2002.
"People were heartened by that. It's suggesting we've seen the bottom and further evidence the technology world is recovering," said Henry Herrmann, chief investment officer at Waddell & Reed, which oversees $35 billion.
Applied Materials rose $3.22 to $47.93. The company reported a quarterly net loss but said new orders rose for the first time in four quarters. Its chief executive said semiconductor revenues have reached a bottom, memory chip prices have risen and chip factory activity has increased.
U.S. retail sales, stripping out cars, racked up their biggest gain since March 2000, the government reported. The high level of spending -- aside from car sales, which weakened as automakers cut back on financing incentives -- bodes well for an economy many believe is recovering from recession.
Sales dipped 0.2 percent overall and a bigger-than-expected 1.2 percent excluding automobiles.
Retailers like Home Depot Inc. , the world's No. 1 home improvement store, and financial shares, including American Express Co. , rallied in the wake of the data. Home Depot rose 93 cents to $51.24, and American Express jumped $1.02 to $34.01.
Office Depot Inc. , the No. 1 U.S. office products retailer, surged $2.30 to $18.49. The company swung to a profit from a year-earlier loss, and it raised its earnings forecast for 2002. Staples Inc. , the second-largest U.S. office supply store, jumped $1.11 to $18.94.
Market experts warn, however, that concerns over financial statements still plague the market. Investors are skittish after a rash of accounting scandals, beginning with collapsed energy trader Enron Corp. to, most recently, bankrupt telecom firm Global Crossing Ltd. .
Qwest Communications International Inc. fell 62 cents to $8.59 and was among the most active on the New York Stock Exchange. The telecommunications service provider said it has accounted for its obligations to another telecom company in accordance with generally accepted accounting principles.
Qwest issued its statement in response to a Wall Street Journal article that noted the transactions boosted Qwest's revenue over the past two years and could be seen as off-balance-sheet deals -- transactions that have drawn heightened scrutiny in the Enron aftermath.
Tyco International Ltd. , recently buffeted by questions about its own accounting practices, fell after it warned its earnings could fall below analysts' estimates. It dropped $1.60 to $28.90 and was the NYSE's most active share.
Concerns about another attack on the United States kept a lid on stock gains in the morning. Los Angeles International Airport was evacuated after an employee discovered a suspicious package in a planter, officials said.
"Investor psychology has been damaged, and investors are hesitant," said Noah Blackstein, a portfolio manager at Dynamic Power American Fund with $230 million in assets. "People are nervous; they are not sure if they should get in or not."
The allure of stocks, however, outweighed investors' concerns.
Data storage systems maker Network Appliance Inc. rallied $2.89 to $19.34, up more than 17 percent. The company posted profits sharply below year-earlier levels but beat forecasts as it raised profit margins on steady sales.
Johnson & Johnson rose 79 cents to $58.09, boosting the blue-chip Dow. The health-care giant's board approved a stock repurchase program of up to $5 billion.
General Motors Corp. advanced $2.13 to $51.20, also lifting the Dow average. Merrill Lynch raised its results estimate on the automaker to a profit from a loss on a boosted forecast for U.S. vehicle sales this year.
Advancing issues led decliners nearly 3 to 2 on the New York Stock Exchange. Volume came to nearly 1.20 billion shares, compared with almost 1.10 billion shares Tuesday.
The Russell 2000 index rose 4.32 to 476.33.
Overseas, Japan's Nikkei stock average gained 0.9 percent. In Europe, Germany's DAX index climbed 1.0 percent, Britain's FT-SE 100 advanced 0.4 percent, and France's CAC-40 rose 0.6 percent.
Reuters and the Associated Press contributed to this report.
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