Stocks Rally Amid Signals That Recovery Is Accelerating
March 5, 2002
By ALEX BERENSON
nytimes.com
Stocks rallied powerfully yesterday for the second consecutive session amid signs that the economy is recovering more quickly and strongly than investors had expected.
Last fall, with the economy apparently in shock after the Sept. 11 terrorist attacks, many forecasters thought the United States might remain in recession for most of 2002. Now, economic growth appears to be accelerating, and investors are snapping up stocks in the belief that corporate profits will soon follow. At least for the moment, the economy's recovery has overwhelmed concerns about corporate accounting as well as worries that stocks remain expensive by many historical benchmarks.
"A weak economy is healing pretty rapidly," said Steven Wieting, senior economist at Salomon Smith Barney. Mr. Wieting now predicts that the economy will grow at an annualized rate of more than 4 percent in the first quarter. A few months ago, he was expecting 1 percent growth for the quarter.
The rally yesterday was broad and deep, with the Dow Jones industrial average gaining 217.96 points, or 2.1 percent, to 10,586.82, its highest level in almost seven months. The Standard & Poor's 500-stock index rose 22.06 points, or 2 percent, to 1,153.84, while the Nasdaq composite index, which is driven mainly by technology stocks, soared 56.58 points, or 3.1 percent, to 1,859.32. |
