Wall Street: Tuesday close

13 April 2012

THE Nasdaq composite index soared to a 17-month high following a string of upgrades of such tech heavyweights as

IBM
Dell Computer

The buying intensified late in the day and spread across the market, sending the Dow Jones up more than 100 points in the final hour of trading.

Analysts attributed the rally to momentum and increasing optimism. 'The technical (investor) types are jumping on board, because the market averages are making news highs,' said Larry Wachtel, market analyst at Prudential Securities.

For much of the day, the market moved unsteadily, rising initially but then dipping lower before recovering in the afternoon. Analysts blamed the market's meandering on the fact that stocks have been rallying for nearly six months, trading well above the lows they hit in mid-March.

'The market anticipated most of that (positive data) earlier in the year,' said Matt Brown, head of equity management at Wilmington Trust.

Shaking off an early loss of 6.15, the Nasdaq jumped 31.03, or 1.7%, to 1841.48, its fifth straight gain. The Nasdaq hasn't seen a higher closing level since 1 April, 2002, when it finished at 1862.62.

The Dow rose 107.45, or 1.1%, at 9523.27, its highest closing level since June 19, 2002 when the blue-chip average stood at 9561.57. The Standard & Poor's 500 index advanced 13.98, or 1.4%, to 1021.99. The last time the S&P stood higher at the end of the day was 18 June, 2002, when it was 1037.14.

The Dow's biggest winner was IBM, which soared $3.75 to $85.76 after Goldman Sachs upgraded computer hardware stocks. Dell, included in that upgrade, rose 97 cents to $33.59.

Goldman also raised its rating on software makers, which lifted Microsoft by 74 cents to $27.26 and PeopleSoft Corp by 62 cents to $18.67.

The upgrades appeared to offset some early selling on doubts created by an economic report. The Institute for Supply management reported that its index tracking activity in the manufacturing sector rose in August for the second consecutive month. But the incremental improvement got a lukewarm reception from investors.

Wall Street was also unhappy with a poor showing in the report for employment in the manufacturing sector, suggesting that a recovery in that key area of the economy may be some way off.

Analysts cautioned against reading too much into Tuesday's rally, noting that it was on light trading volume and was driven more by momentum than improving economic fundamentals, especially where techs were concerned.

'Tech sometimes has a life of its own on a momentum basis,' Brown said. 'As that happens you need to watch valuations.'

Outside technology, shares of Vivendi Universal SA climbed $1.35 to $18.25 and NBC rose 87 cents to $30.44 on news the companies were in exclusive talks over the sale of Vivendi's entertainment assets.

Rising stocks outpaced falling issues nearly 3 to 1 on the New York Stock Exchange. Volume was light after US markets were closed on Monday for Labour Day. The Russell 2000 index, which tracks smaller company stocks, rose 10.08, or 2%, to 507.50.

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