Stocks Soar As CEO Deadline Nears
August 14, 2002
Analysts attributed part of the gains to bargain-hunting following Tuesday's declines, which were prompted by the Federal Reserve's decision not to lower interest rates.
(CBS) Wall Street displayed its volatile nature again Wednesday as investors staged a late-day rally, sending the Dow industrials up more than 260 points.
The market's advance reversed an earlier sell-off as investors remained mindful of an end-of-business-day deadline for companies to certify their financial results. As the session wore on, analysts said investors were feeling more confident in companies' ability to stand by their results.
Technical factors, such as traders trying to make a quick profit once the markets turned upward after a two-day downturn, may also have contributed to the rush of buying, analysts said.
"It just seems like the selling ran out of steam. Once it turned higher, you had short-term traders hop in on the long side," said Richard A. Dickson, technical analyst for Hilliard Lyons in Louisville, Ky. "It's just more of the volatility that we have been seeing."
The Dow rose 260.92, or 3.1 percent, to 8,743.31, according to preliminary calculations. After falling as much as 129 points earlier in the session, the blue chip index more than recovered from Tuesday's 207-point loss.
The broader market was also sharply higher. The Nasdaq composite index gained 65.02, or 5.12 percent, to 1,334.30, following Tuesday's loss of 37.52. The Standard & Poor's 500 index rose 35.42, or 4.01 percent, to 919.63, after falling 19.58 points the day before.
Analysts attributed part of the gains to bargain-hunting following Tuesday's declines, which were prompted by the Federal Reserve's decision not to lower interest rates.
Investors were also becoming more confident as several companies' chief executives began to certify their financial reports before the Securities and Exchange Commission's deadline, which was the close of business Wednesday.
"There is just a certain amount of relief that the signatures were coming in," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray.
About 700 of the 947 companies covered by the SEC's unprecedented, one-time order had to comply by the close of business on Wednesday. Some companies will file later.
At mid-afternoon, officers of 500 of the 700 companies due to certify results on Wednesday had done so.
Some companies were reporting a need to restate their finances, including Household International Inc., the nation's No. 2 consumer finance concern, which said it had earned $386 million less than previously reported over the last nine years.
Also making restatements: Convenience-store retailer The Pantry Inc. said it had found an "inadvertent" $8 million accounting error in its reports for the first and second quarters. The company, based in Sanford, N.C., said it overstated its accounts payable but the error did not affect its revenue or profits.
And Interpublic Group of Cos., a major advertising business, said it had identified $68.5 million in expenses that had not been properly accounted for. The company is restating its earnings back to 1997 to reflect the overlooked expenses, mostly incurred in its European operations.
Among the CEOs filing statements on Tuesday: multibillionaire investor Warren Buffett, who vouched for the veracity of his Berkshire Hathaway Inc.'s 2001 annual report, its second-quarter report for this year and other financial statements. The company's chief financial officer, Marc Hamburg, also submitted a statement.
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