NEW YORK, Oct 27: Traders managed to reignite a rally on Wall Street this week, looking ahead to a recovery next year despite grim news from the corporate front and growing fears of bioterrorism.
The Dow Jones industrial average rose 3.71 per cent for the week to close on Friday at 9,545.17 while the tech-heavy Nasdaq gained 6.54 per cent to 1,768.96 and the Standard and Poor’s 500 added 2.90 per cent to 1,104.61.
It was the fourth week of gains in the past five weeks after the market hit bottom in mid-September in the wake of the September 11 terrorist assault.
Analysts said that even though the attacks had taken a toll on a weakened US economy, investors are able to look over the valley to improvement next year.
Despite the absence of any truly positive catalysts, stock market investors managed to carve a winning face this past week, said Banc of America Capital Management chief economist Lynn Reaser.
The market’s performance has been particularly impressive in the face of negative economic news and ongoing revelations of anthrax attacks.
Mace Blicksilver of Marblehead Asset Management said he sees the rally continuing barring any major negative development.
Unless we get some really interesting piece of news one way or another, we should have more of the same, he said.
Wall Street in the coming week will likely have to face up to data showing a clear recessionary trend as the government’s first estimate of gross domestic product growth is to be released Wednesday.
Analysts expect the figures to show a 1.3 per cent contraction in the US economy in the July-September period after the tepid growth of 0.9 per cent in the second quarter.
And earnings for big US firms have been down 21 per cent compared with a year earlier.
Still, some analysts see the market continuing its upward trend as it comes out of an 18-month-old bear market.
There is an old Russian saying: ‘The devil is not as frightening as his picture,’ said Alfred Goldman of AG Edwards.
Terrorism is today’s devil, and it is the main problem facing our nation, our economy and our financial markets ... Every thinking person knows that our economy will recover and that corporate earnings will again grow. And sure as spring follows winter, stock prices will rise again.
A research note by Wachovia Securities said the $100 billion stimulus package approved by the House of Representatives, even if scaled back, will help a recovery.
Among active issues, Kimberly-Clark rose 6.58 per cent for the week to end at $55.68, Honeywell rose 9.89 per cent to 30, American Airlines added 7.31 per cent to 19.82, Northwest Airlines advanced 12.55 per cent to 13 and Dow Chemical 3.30 per cent to 35.02.
Microsoft, which launched its new Windows XP, gained 7.43pc to 62.20.—AFP
