Post-4th Boom on Wall Street,
Dow Skyrockets to Biggest Gain in 9 Months

July 5, 2002

New York, (Bloomberg) -- U.S. stocks rallied, as the Standard & Poor's 500 Index extended a rebound from its lowest level in 4 1/2 years. Computer-related shares, including Intel Corp., led the gain amid speculation earnings will grow this year.

In a shortened trading day following the Independence Day holiday, the Dow Jones Industrial Average's advance exceeded 300 points for the first time in more than nine months. Twenty-nine of its 30 stocks rose. Shares at their lowest in at least five years, including AT&T Corp. and Hewlett-Packard Co., surged.

``It is time to jump into the market,'' said Benjamin Pace, who oversees $7 billion in stocks at Deutsche Bank Private Banking. ``Earnings forecasts for the third and fourth quarters and comparisons should be very good.''

The Dow rose 323.15, or 3.6 percent, to 9378.33, its biggest gain since Sept. 24. Only Coca-Cola Co., which has its largest gain this year, fell. The S&P 500 added 35.01, or 3.7 percent, 989.00. Technology shares accounted for a quarter of the advance. The Nasdaq Composite Index rose 68.13, or 4.9 percent, to 1448.

For the 3 1/2 day-trading week, the Dow gained 1.5 percent, its first weekly gain in seven. The S&P 500 declined 0.1 percent and the Nasdaq shed 1 percent.

Trading totaled 710 million shares, about half the year's average on the New York Stock Exchange. Markets were shut yesterday.

Uneventful Holiday

Some investors said the absence of a terrorist attack, against which government officials beefed up security July 4, helped shore up investor confidence.

Still, after 2 1/2 years of declines in benchmark indexes and the S&P 500's worst first-half since 1970, ``It's going to take a lot of these days to get anyone excited about stocks again,'' said Brian Kirkpatrick, a manager at Bridges Investment Counsel in Omaha, Nebraska, which oversees $2 billion.

After a 14 percent decline this year, the S&P 500 Index sells for 19 times expected earnings for the coming year. That means stocks are less expensive than they were after the Sept. 11 attacks and cheaper than they were after the 1998 collapse of the Long Term Capital Management hedge fund.

Analysts predict that S&P 500 company earnings will rise 16.7 percent this quarter and 28.6 percent next quarter, according to Thomson First Call. Investors are betting that companies will increase their spending on computer-related equipment once their profits rebound.

Today's rally came after the U.S. Labor Department said payrolls rose by 36,000 last month compared with the 75,000 forecast. The June unemployment rate rose to 5.9 percent from 5.8 percent, matching analysts' projections.

``It's slightly disappointing because we were expecting a little bit more in payroll employment growth in June,'' Pace said. ``Clearly, from an economic standpoint we are not in a horrible situation. We are still growing jobs and the consumer still has money in their pocket to spend.''

Pace has been buying home-improvement chain Home Depot Inc., energy company Noble Corp. and Banc of America Corp.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=
ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=ad_right1_topfin&bt=
ad_position1_topfin&middle=ad_frame2_topfin&s=APSXS7RNDVS5TLiBT