NEW YORK: Stocks rallied in a whipsaw session on Friday as battered share prices and a reassuring outlook from Dell Computer Corp lured investors still grappling with the threat of war in Iraq.
In a highly anticipated speech, top UN weapons inspector Hans Blix offered a mixed picture on Iraq that provided fuel to both hawks and doves on the Security Council facing a decision on war with Baghdad over banned weapons. Stocks climbed as Blix spoke, eased after his report and rose again.
“This is only temporary relief,” said Stanley Nabi, managing director at Credit Suisse Asset Management, which oversees about US$56bil in North America.
“This standoff with Iraq is going to continue to fray the market, but the market is getting to a point where it's oversold.”
Traders were skeptical of the gains, saying stocks bounced after hitting four-month lows this week. Dell, the world's No. 2 personal computer maker, jumped almost 11% and boosted technology stocks after posting a higher profit and standing by quarterly targets. Chip maker Nvidia Corp soared 22%, adding another bright note with its earnings report.
Major market gauges climbed for the first day in four and snapped a four-week losing streak. The Dow Jones industrials leaped 158.93 points, or 2.05%, to 7,908.80. The Standard & Poor’s 500 rose 17.52 points, or 2.14%, to 834.89. The tech-laced Nasdaq Composite jumped 32.73 points, or 2.56%, to 1,310.17.
Despite the gains, tension hung thick over Wall Street ahead of a long holiday weekend with America on heightened alert for possible terror attacks. The stock market will be closed on Monday in observance of Presidents Day.
“If you walked by the Waldorf (hotel) last night, there were a dozen police officers out there with big automatic weapons,” said Charles White, president of investment firm Avatar Associates. “It has a psychological effect whether you admit it or not.”
Advancing stocks beat out decliners by a ratio of 7 to 4 on the New York Stock Exchange and 5 to 3 on Nasdaq. More than 1.37 billion shares changed hands on the Big Board and more than 1.30 billion on the Nasdaq in moderate trading.
The Nasdaq climbed 2.2%, the Dow gained 0.6% and the S&P 500 rose 0.6 for the week.
Traders said they still see a US strike on Iraq but added the market is widely expected to rally whether there is a peaceful outcome or a war. Some market watchers said investors wanted to take up positions in equities before any rally that could be sparked by a resolution to the conflict.
“The big cloud hanging over the market will be behind us,” said Dan McMahon, head of listed trading at CIBC World Markets.
“What you need to remove is the uncertainty. If we are going in, then we go in and let's get it over with. If it goes as all the military planners say, then that will be a positive. If we are not going in, whatever the peaceful resolution is, that's fine too.”
Dell raked in US$2.52 to US$25.77 and ranked as the most active share on the Nasdaq. The personal computer maker said quarterly profit rose as it shrugged off stiff competition and said it would meet analysts' expectations for the first quarter.
Computer maker Hewlett-Packard, which reports earnings for its first fiscal quarter on Feb 25, gained 84 cents, or almost 5%, to US$17.79 and led the Dow higher.
Chip maker Analog Devices Inc rallied US$3.02, or 12%, to US$26.90. The company reported sharply higher first-quarter earnings on strong sales of wireless analog and digital signal processing chips.
Adding to the positive earnings news, software maker Intuit Inc posted a bigger fiscal second-quarter net profit, helped by rising sales to small businesses and key products like TurboTax. Shares jumped US$2.76, or 6%, to US$44.43.
But Universal Health Services Inc sank US$6.96, or 16%, to US$34.99 after investment house Merrill Lynch cut the hospital operator’s investment rating because its chief financial officer is leaving.
Reports on Friday showed that US factories were humming in January, but consumer anxiety deepened in early February.
Manufacturing activity at the nation’s factories rebounded by a stronger-than-expected 0.7%, as automakers cranked up production and utilities boosted output to cope with an unusually cold winter.
But prospects for future growth were clouded by a drop in consumer sentiment to a 9 1/2 year low as the nagging threat of war soured consumers’ outlook for the economy. The University of Michigan's preliminary February sentiment index fell to 79.2 from 82.4, below analysts expectations. – Reuters