In a seesaw session, stocks finished solidly in the black on Wednesday amid short-covering and bargain hunting, helping the major averages recover from some 4-year lows.
"We got a nice bounce today after hitting a four-year low, but I don't expect this to be the start of a turnaround. There's still too much uncertainty over the third quarter earnings outlook and the prospects for war," says Stephen Carl, principal and head of U.S. equity trading for the Williams Capital Group, L.P.
Among the stocks in the news, General Electric (GE) said results are "on track" for the third quarter. GE had said in July it expected third-quarter revenue to increase 8% to 10% and earnings to rise 20% to 25%.
Sentiment was also lifted after billionaire investor Warren Buffett said he's still bullish on the U.S. economy, and that he believes the stock market is out of sync with the general economy.
On a less positive note, Micron Technology (GE) posted a worse-than-expected fourth quarter loss.
In other corporate news, the new chief executive at Tyco International Ltd. (TYC) said there's "no reasonable scenario" under which the conglomerate's fiscal 2003 earnings would reach $2 a share -- a number well short of consensus Wall Street estimates, according to wire-service reports.
The Dow Jones industrial average climbed 158.69 points, or 2.07%, to 7,841.82. The Nasdaq composite index added 40.10 points, or 3.39%, to 1222.27. The broader Standard & Poor's 500-stock index was higher by 20.37 points, or 2.49%, to 839.65. Among the sectors posting gains were financials, semiconductors, biotech, and oil.
Treasuries ended Wednesday's session lower in price as traders took profits after a strong rally pushed yields to historically low levels, while stocks rebounded from multi-year lows.
In economic news, U.S. existing home sales slipped 1.7% to a 5.28 million annual pace in August from an upwardly revised 5.37 million rate in July (from 5.33 million initially). The supply of homes for sale rose to 5.0 months from 4.7. Sales fell in all four regions except for the West, partially erasing the gains registered in July. Though the greater than expected headline drop in sales could help put a floor on Treasury losses, the pace of sales remains fairly robust, according to MMS International.
European markets ended with gains. In London, the Financial Times-Stock Exchange 100 index was up 25.10 points, or 0.68%, to 3,696.20, in short covering from recent skids. In France, the CAC 40 added 42.57 points, or 1.55%, to 2,785.38, on short covering. And in Germany, the DAX Index was up 89.29 points, or 3.11%, to 2,962.50, after a sentiment index fell lower than expected, raising hopes about the economy.
In Asia, the markets finished lower. The Nikkei fell 156.23 points, or 1.68%, to 9,165.41, taking a cue from U.S. equities. Plus, the weaker U.S. dollar resulting from a slide in the country's equities spurred earnings fears over the Japan's exporters. In Hong Kong, the market lost 72.77 points, or 0.79%, to 9,124.91.