By ,
Published January 13, 2015
Stocks started 2002 cautiously Wednesday, with investors putting off buying for most of the day but still managing to swing the market into positive ground on a late-day rally.
The Dow Jones industrial average rose 51.9 points, or 0.52 percent, to 10,073.40, while the Nasdaq composite added 28.86 points, or 1.48 percent, to 1,979.26. The benchmark Standard & Poor's 500 gained 6.59 points, or 0.57 percent, to 1,154.67.
"There are a lot of people who feel the market is more likely than not to be positive this year," said Rick Meckler, president of investment firm LibertyView. "We had a little bit of a sell-off on Monday and early this morning, and now people feel maybe it's stopped and is headed back up."
Fund managers were shuffling their portfolios, positioning themselves for the year ahead as the first trading session of 2002 got under way, analysts said. History, at least, points to a higher 2002 after two back-to-back years of steep declines — the first since 1973 and 1974.
Technology stocks like Cisco Systems , up more than 6 percent to $19.23, led the market higher. Chipmakers emerged as a bright spot after a report showing rising prices for computer chips.
Kmart Corp., the No. 2 discount chain behind Wal-Mart Stores Inc., dropped 72 cents, or more than 13 percent, to $4.74, hitting its lowest point in 20 years. Prudential Securities cut its rating on Kmart to "sell" from "hold," citing disappointing quarterly results as well as a possible bankruptcy. Kmart responded it was in solid financial shape.
Media giant AOL Time Warner was among the most active stocks on the NYSE, falling 50 cents to $31.60 after Morgan Stanley reduced AOL's revenue estimates for 2002 and 2003, reflecting lower subscriber and advertising revenue.
A drop in safe-haven U.S. Treasuries showed investors were more hopeful about the economy, analysts said. The U.S. benchmark 10-year Treasury note tumbled more than a full point after the manufacturing report signaled the worst of the sector's recession may be over.
"A number of institutions which are overly weighted in debt ... are now looking to get into the equity market because returns on bonds are not seen to carry them through the first quarter," said George Rodriguez, senior vice president of equities at investment firm Guzman & Co.
A better-than-expected performance from the manufacturing sector in December offered investors hope for better days to come.
The Institute for Supply Management's monthly Purchasing Managers' Index, a closely watched gauge of the U.S. manufacturing sector, rose more than expected for a second straight month in December, suggesting the sector is emerging from a 17-month slump deepened by the Sept. 11 attacks.
"People are taking the ... data as a serious indication the economy is doing a little better," said Henry Herrmann, chief investment officer at Waddell & Reed. He cautioned, however, that Wall Street was still in sluggish holiday mode.
With interest rates at their lowest point in 40 years and a rebound in the economy and corporate profits expected within the next year, investors may start putting to work the hefty pile of cash they have parked on the sidelines.
Investments easily converted into cash, like savings and money market accounts have jumped $1 trillion to $5.6 trillion in the past year and now equal about half of the U.S. gross domestic product, said Edward Yardeni, chief investment strategist for Deutsche Banc Alex. Brown.
"There's enough cash out there to revive the economy, keep home sales strong and push stock prices higher," Yardeni said. "It's enough to create a whole new bubble if we set our mind to it."
Persistent worries about just when the economy will make its anticipated comeback and concerns about the ailing health of corporate profits, however, will keep investors' enthusiasm in check, analysts said.
Hopes for an economic rebound in 2002 have already helped hoist the market well off three-year lows hit on Sept. 21, and Wall Street may be running out of steam.
"Unless there are clearer signs that we are picking up in an economic recovery I think we're going to have this kind of choppy market until we get a little further into the earnings season," said James Volk, co-director of institutional trading at D.A. Davidson & Co. "There's no real reason for these markets to rally at this point."
The Semiconductor Industry Association said on Wednesday global semiconductor sales rose in November, offering a glimmer of hope for the chip industry as it struggles through its worst-ever decline.
Micron Technology Inc., the No. 2 memory chip maker, rallied $2.24, or more than 7 percent, to $33.24. Intel Corp. , the world's No. 1 provider of computer chips, gained $1.55 to $33. The Philadelphia Stock Exchange Semiconductor index tacked on a 4.45 percent gain, extending its surge since Sept. 21 as investors bet chip shares will be the first to recover in an economic rebound.
The rally in tech shares was broad, encompassing networking shares like Juniper Networks and personal computer companies like Hewlett-Packard . Data storage systems maker EMC Corp. was the NYSE's most active stock, up $1.36 at $14.80.
Declining issues outnumbered advancers 7 to 5 on the New York Stock Exchange. Volume came to 132.97 million shares, compared with 96.25 million at the same point Monday.
The Russell 2000 index, which reflects the performance of smaller company stocks, fell 1.31, or 0.3 percent, 487.19.
Overseas, Japan's financial markets were closed for the New Year's holiday, and will reopen Friday.
In Europe, stocks were mixed and investors were cautious following Tuesday's debut of the euro, Europe's new single currency. France's CAC-40 finished down nearly 1 percent, while Britain's FT-SE 100 eked out a gain of 0.02 percent and Germany's DAX index gained 0.2 percent.
Reuters and the Associated Press contributed to this report.
https://www.foxnews.com/story/stocks-trim-losses-as-wall-street-kicks-off-2002