Stocks rallied strongly yesterday as investors grew more confident about the prospects for the economy despite the impact of hurricanes...
NEW YORK — Stocks rallied strongly yesterday as investors grew more confident about the prospects for the economy despite the impact of hurricanes Rita and Katrina.
The Dow Jones industrial average rose 79.69 to 10,552.78.
Microsoft, one of the 30 Dow stocks, gained 27 cents to close at $25.94 a share. Boeing, also a Dow stock, added 7 cents to $67.28.
Broader stock indicators also were higher. The Standard & Poor’s 500 index rose 10.79 to 1,227.68, and the Nasdaq composite index climbed 25.82 to 2,141.22.
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Oil prices rose for a second straight session. A barrel of light crude was quoted at $66.79, up 44 cents, on the New York Mercantile Exchange.
While many of the hurricanes’ long-term effects have yet to be determined, stocks rebounded after two weeks of losses on bullish comments from analysts and the government. However, the markets remain relatively unchanged for the month, and trading was very light.
“It’s a trading rally, and not much more than that,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. “If there’s anything you can hang your hat on, it’s that with every passing day, some investors become convinced that there’s not going to be any serious fallout or damage to the economy or earnings due to the hurricanes.”
The hurricanes left some businesses battered but should help earnings elsewhere. The problem is that despite Wall Street’s overall bullishness, no one can yet know which companies will fall into which category. Third-quarter earnings may not even be a solid indicator, as much of the economic impact from the storms may not show up until the fourth quarter or beyond. Wall Street will be particularly focused on company forecasts as they release results.
“That’s where investors should be shifting their emphasis in the information-rich next few weeks,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank.
On the economic front, the market would have loved strong gross domestic-product numbers from the Commerce Department — had investors thought the numbers were relevant.
The reported annual growth rate of 3.3 percent came from data gathered before Katrina and Rita. While GDP measures the value of all goods and services produced within the United States and is the best barometer of the nation’s economic fitness, traders are waiting for numbers that will show the hurricanes’ effect on the economy.
In company news, PepsiCo, the soft-drink and snack-foods maker, said its third-quarter profit dropped because of a charge related to repatriation of overseas earnings.
Still, its results without the charge beat Wall Street estimates. Its shares rose $1.44 to $56.50.