Stocks Rally Late Thursday, Investors Shift Focus to Economy

NEW YORK (AP) - Cheered by news of stronger-than-expected economic growth and lured by lower prices following nearly six weeks of selling, investors decided to take some chances on stocks and bid the market sharply higher.

The upturn came despite lingering uneasiness over corporate ethics and followed Wednesday's volatile session, when stocks tumbled on WorldCom's news but recovered late in the day as program buying kicked in.

In midafternoon trading Thursday, the Dow Jones industrial average was up 115.26, or 1.3 percent, at 9,235.37. The Dow fell as much as 200 points Wednesday and traded below 9,000 for the first time since October, but closed with a slim loss of 6.71.

The market's broader indicators were also higher, and were ahead of the post-Sept. 11 lows they fluctuated around on Wednesday. The Nasdaq composite index rose 19.45, or 1.4 percent, to 1,448.78, above its post-attack low of 1,423.19.

The Standard & Poor's 500 index climbed 10.47, or 1.1 percent, to 984.00, above its post-attack low of 965.80.

Some of the market's gain was owed to lower stock prices. Wall Street has suffered through six weeks of heavy selling on fears about more terrorism and concern about earnings growth and the accuracy of corporate financial reports.

Analysts were encouraged by stocks' ability to advance in the wake of WorldCom's disclosure that it hid $3.8 billion in expenses. The announcement means the company might have been losing millions as it reported profits.

After a string of scandals - including those at Enron, Tyco, and ImClone - analysts believe investors might have accounted for the possibility of more accounting fiascoes.

"That is priced in now," said Susan L. Malley, chief investment officer for Malley Associates Capital Management in New York.

Malley said she expects investors to shift their attention to the economy, which is showing signs of strengthening.

"And that is a good thing because as we go along the economic news will be more and more positive, and will give the market a catalyst to get it going again," Malley said.

On Thursday, however, investors didn't immediately respond to positive economic news by buying shares. The market traded lower earlier in the session, uninspired at first by news from the Commerce Department that the economy as measured by the gross domestic product grew at an annual rate of 6.1 percent in the first quarter. That pace of growth was ahead of the government's previous estimates of 5.8 percent and 5.6 percent.

While economic data has been turning more positive throughout the year, analysts say the market's recovery is still going to be rocky. Many say stocks are still overpriced and that investors need time to recover their confidence.

"The fact is the economy is OK, and that is a good underpinning," for the market, said Scott Bleier, president of Hybridinvestors.com. "But it has been painful, and we are not going back to the heady years. There is still a tremendous amount of pessimism and bearishness."

Upbeat earnings news contributed to the market's advance. Food maker ConAgara rose 92 cents to $27.08 after reporting fiscal fourth-quarter profits that beat analysts' expectations by 3 cents a share.

Claire's Stores climbed $1.37 to $21.80 after raising its second-quarter profit estimate.

Financial stocks recouped some of Wednesday's losses, which were based on worries that they would lose money on WorldCom loans. Citigroup advanced 75 cents to $37.75, and Bank of America rose 90 cents to $68.35.

WorldCom rivals again traded lower. BellSouth slipped 7 cents to $30.18. WorldCom has not opened for trading since its announcement late Tuesday.

Advancing issues outpaced decliners more than 9 to 7 on the New York Stock Exchange. Volume came to 1.16 billion shares, below 1.25 billion traded at the same point Wednesday.

The Russell 2000 index, which tracks smaller company stocks, rose 3.29, or 0.7 percent, to 456.26.

Overseas, Japan's Nikkei stock average finished Thursday up 1.9 percent. In Europe, France's CAC-40 rose 1.1 percent, Britain's FTSE 100 inched up 0.2 percent, and in late-day trading, Germany's DAX index was up 2.0 percent.

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I don't trust the government's numbers. Nothing has changed and any rally is end of the quarter window dressing by institutions to make them look better to their shareholders. It is all very suspect.

Richard W.

It's a joke. Eventually this will crumble. Now we are seeing that this whole boom was really a hoax. Soon the sheeple will see just how bad the nation's finance is but by then we will be forced to accept a world currency. All done under the aspices of the "Two-Party Cartel".

I'm with you.

The big money on Wall Street is manipulating this market. The big boys are dumping shares on the peaks and looking to prop the market up so they can continue to do their IPOs.

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