Wall Street boosted by late rally
Published: Thursday, August 1, 2002 at 6:01 a.m.
Last Modified: Thursday, August 1, 2002 at 12:00 a.m.
Market's solid gains
AT A GLANCE
WALL STREET on Page 7B
Continued from 5B
WALL STREET: AOL downBy LISA SINGHANIA
AP business writer
NEW YORK - A last-minute burst of buying lifted stocks to a mixed finish Wednesday despite a disappointing economic report and more accounting questions about AOL Time Warner. Blue chips rose slightly, while technology issues pulled back.
Analysts were encouraged by the market's relatively calm reaction to the news, saying the stability reflects growing optimism that the market's worst days are behind it.
"The tone of the market is improving," said Stephen Massocca, president of Pacific Growth Equities. "The economy has slowed down, but I think people know we're not going back into recession."
The Dow Jones industrial average closed up 56.56, or 0.7 percent, at 8,736.59, helped by a flurry of buying in the last half hour of trading.
Broader stock indicators fluctuated, with the technology-focused Nasdaq composite index falling 15.93, or 1.2 percent, to 1,328.26. The Standard & Poor's 500 index rose 8.84, or 1.0 percent, to 911.62.
The market's gains were especially impressive given the fact that profit-taking following the market's huge rally is still going on. The Dow has risen 1,034 points over the past six sessions, with similarly solid gains in the Nasdaq and S&P.
Analysts say that if the rally holds, it could mean that stock prices have finally bottomed and a recovery can begin. But they caution that it's still too early to know for sure. Wall Street has had a pattern over the last two years of rallying and then falling back - and investors who have watched their portfolios evaporate have a lot of incentives to sell and lock in profits.
The Commerce Department reported Wednesday that the economy as measured by the gross domestic product, or GDP, grew at an annual rate of 1.1 percent in the second quarter, significantly slower than the revised 5 percent growth rate recorded in the first three months of this year. The figure was also below the 2.2 percent growth rate many analysts had expected.
The weaker numbers suggested consumer spending, which accounts for two-thirds of all economic activity, and bigger cuts by business in investment were affecting the economy's ability to turn around.
AOL Time Warner fell 90 cents, or 7.3 percent, to $11.50 after confirming that the Justice Department was investigating its accounting practices. The news failed to prompt selling across the market, however - probably because the media company had previously said the Securities and Exchange Commission was looking at its balance sheets.
"The SEC was already investigating and it's not atypical to see the Department of Justice come in right behind them, so I don't know that this was unexpected," said Brian Bush, director of research at Stephens Inc. "I also think that most investors believe that the government, the SEC . . . are all focused on cleaning up whatever problems there are out there. So investors are starting to get some sense that the fix is in."
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