Economic Data Pushes Dow to 6-Month High
By Haitham Haddadin
NEW YORK (Reuters) - Stocks rallied on Friday, with the blue-chip Dow Jones industrial average hitting a six-month high, after upbeat data on manufacturing, construction and consumer spending raised hopes the economy and corporate profits will rebound soon.
A rosy business outlook from Novellus Systems Inc. (NasdaqNM:NVLS - news), a major producer of chip-making equipment, also helped. Novellus shares soared 14 percent and a sector rally ensued.
``It's an extremely powerful and meaningful rally, based on the economic data, which negate the thought the economy is in recession. That's what the market wants to hear,'' said Peter Cardillo, chief strategist at Global Partners. ``Novellus' bright outlook also added a lot of wood to the fire.''
The Dow surged 262.73 points, or 2.6 percent, to 10,368.86 -- its strongest close since Aug. 27, 2001.
The broader Standard & Poor's 500 Index (^SPX - news) rose 25.05 points, or 2.26 percent, to 1,131.78. The technology-laced Nasdaq Composite Index (^IXIC - news) pulled in a gain of 71.26 points, or 4.12 percent, to 1,802.75.
For the week, the Nasdaq rose 4.54 percent, snapping a four-week losing streak. The Dow average rose for the third straight week, gaining 4.02 percent, while the S&P 500 climbed 3.85 percent.
A key report showed factories had boosted production in February for the first time since July 2000 to meet a wave of new orders as demand for manufactured goods soared. That, plus other data for January showing U.S. consumer spending surged and construction spending grew at its fastest pace in a year, offset a drop in a closely watched consumer sentiment gauge.
``For several months now, the economic data has been stronger than the market,'' said Edward Hemmelgarn, chief investment officer of Shaker Investments, which oversees $2.3 billion. ``People are taking the better economic numbers and, for the first time, believing that that may translate into better corporate (earnings) numbers.''
Semiconductor stocks helped lead Nasdaq's rebound after the update by Novellus, whose shares rallied $5.97 to $48.56. ''There are signs of the downturn going away,'' Novellus Chairman and Chief Executive Richard Hill said. ``We see that February has followed January with continued signs of recovery.''
The Philadelphia Stock Exchange's semiconductor index (^SOXX - news) jumped 11 percent, reflecting gains in the shares of others such as Applied Materials (NasdaqNM:AMAT - news), up $4.51 at $47.98.
``Maybe we can see other companies giving better guidance or even hint at increasing capital spending,'' Cardillo said.
Chip giant Intel Corp. (NasdaqNM:INTC - news) climbed $2.43 to $30.98, helping both the Dow and the Nasdaq. It reported China was set to overtake Japan as its largest Asian customer within two years.
Chartered Semiconductor Manufacturing (NasdaqNM:CHRT - news), the world's third-largest independent foundry, raised its guidance and pointed to a sector rebound. It rose $2.87 to $25.35.
Crown Castle International Corp. (NYSE:CCI - news), the No. 2 wireless tower operator, rose 27 percent, or $1.69, to $7.90, after it reported greater-than-expected leasing revenues for the fourth quarter amid a downturn in the industry.
AT&T Wireless Services Inc. (NYSE:AWE - news) fell sharply as the nation's No. 3 wireless company warned that revenue growth -- excluding a recent acquisition -- will slow due to the weak economy and increased competition. It was the most active stock on the Big Board, slumping $1.49 to $8.60.
Biotechnology companies Invitrogen Corp. (NasdaqNM:IVGN - news) and Protein Design Labs Inc. (NasdaqNM:PDLI - news) sank after each said sales growth in 2002 would be slower than expected. Invitrogen fell $11.52 to $34.12. Protein Design fell 93 cents to $14.94.
PerkinElmer Inc. (NYSE:PKI - news) sank 31.52 percent after the maker of scientific instruments lowered its earnings forecasts and said it would cut 500 jobs and reorganize a unit. Shares plunged $7.25 to $15.75.
But Andrx Corp. (NasdaqNM:ADRX - news) surged 25.29 percent after a federal judge threw out a lawsuit claiming its planned copycat forms of British drugmaker GlaxoSmithKline's drugs Wellbutrin and Zyban infringe Glaxo patents. Andrx jumped $8.46 to $41.91.
A rise in mortgage applications and industrial metal prices, along with a fall in corporate bond yields, helped to push a weekly indicator of U.S. economic activity slightly higher last week, the Economic Cycle Research Institute said.
``It's hanging in at relatively modest growth rates, which is telling you that the recovery is not going to be a gangbusters recovery,'' said Anirvan Banerji, ECRI research director. ``But if it stays here, then we don't see a double-dip recession.''
The Dow muscled right through a key technical ``resistance'' level at 10,300. A close above that level, technical analysts now believe, opens the way to tackle resistance at 10,400 to 10,500.
Resistance -- a level where sellers are likely to emerge -- is now set at 10,500 for the Dow, 1,850 for Nasdaq, and 1,132 for S&P, according to Schaeffersresearch.com.
Support -- where buyers are expected to swoop in -- is at 1,750 for Nasdaq, 10,200 for the Dow, and 1,120 for the S&P. The levels are key elements of technical analysis, which studies prices, volume and charts. |
