Stocks Make Big Gains
Stocks romped ahead on Wednesday as Wall Street shifted its focus back to corporate news, which for once was mostly upbeat. On the war front, the U.S. declared its bombing of Afghanistan had given it air superiority in the conflict with Taliban military forces.
Among the positive corporate news, Lam Research Corp. (LRCX ), a semiconductor equipment maker, posted results that exceeded Wall Street's expectations.
And soft-drink and snack-food behemoth PepsiCo Inc.(PEP ) said its third-quarter profits rose 14% before charges. It also said it still sees its earnings increasing 13% to 14% in 2002.
"We saw strong gains in many sectors -- insurance, retail, biotech, semiconductors and energy," says Stephen Carl, principal and head of U.S. equity trading, The Williams Capital Group, LP. "Evidently buyers realize these stocks are still cheap relative to their pre-September 11 prices. But, there's no conviction yet. Participants are still looking to events in Afghanistan and what the President does for guidance."
Not all corporate news was good. Wireless technology giant Motorola Inc. (MOT ) put Wall Street on notice that it saw a fourth straight quarterly loss and that it was cutting another 7,000 jobs, bringing the year's total reductions to 39,000.
The world kept close watch on the Middle East as U.S. warplanes pounded Afghanistan, which is harboring suspected terrorist Osama Bin Laden, for the fourth straight day. Thursday will mark the one-month anniversary of the September 11 terrorist attack that destroyed New York's World Trade Center and damaged the Pentagon.
The Dow Jones industrial average ended up 188.42 points, or 2.08%, at 9,240.86. The tech-heavy Nasdaq Composite Index gained 55.98 points, or 3.57%, to 1,626.17. The broader Standard & Poor's 500 Index added 24.23 points, or 2.29%, to 1,080.98.
U.S. Treasuries ended mixed on strength in stocks. S&P's economic research unit MMS notes that a modest amount of risk premium was finally taken out of the markets as air operations over Afghanistan continued without any major allied setbacks.
In economic news, the U.S. wholesale trade picture improved in August, though the figures have not altered Standard & Poor's outlook for the economy. U.S. wholesale inventories fell 0.1% and sales rose 0.6% in August. The data will have no market impact, according to S&P's MMS economic research unit.
European markets closed higher. In London, the Financial Times-Stock Exchange 100 index was up 143.30 points, or 2.86%, to 5,153.10. The bigest contributors to the advance in the FTSE were BP Amoco, Vodafone, GlaxoSmithKline and Shell Transport. Germany's DAX Index gained 140.77 points, or 3.15%, to 4613.19 even though the German unemployment rate rose to 9.4% in September from 9.3% in August. In France, the CAC 40 rose 142.41 points, or 3.41%, to 4,319.38.
Stocks finished lower in Asia. In Japan, the Nikkei 225 index, fell 46.89 points, or 0.47%, to 9964.88 after the market weakened in the afternoon, as losses in banks and telecommunications shares swelled. Meanwhile, Hong Kong's Hang Seng shed 60.69 points, or 0.59%, to close at 10,298.24.