Stocks rise, but market nervous

  • Monday, September 24, 2001 9:00pm
  • Business

Associated Press

NEW YORK — Stocks surged higher Monday, carrying the Dow Jones industrials up more than 360 points, as bargain hunters helped Wall Street rebound from one of its worst weeks ever. But the market remained extremely nervous, and no one was betting that the gains would hold.

Despite Monday’s big advance, investors will be wary of making any major moves until it’s clearer how the government will retaliate for the Sept. 11 terrorist attacks, analysts said. The market is also trying to determine how much and for how long the economy will suffer.

The first economic impacts of the attacks have already been felt as companies warned of weaker profits and laid off thousands of workers as they expect consumers to spend and borrow less and take fewer vacations.

The Dow closed Monday up 368.05, or 4.5 percent, at 8,603.86, recovering more than a quarter of the 1,369.70 it lost last week in its biggest-ever weekly decline. The Dow was up as much as 413.51 in the last hour Monday before giving back some of its surge, which was still large enough to be the blue chips’ fifth largest daily point gain.

Monday’s rebound didn’t mean the market has overcome its uncertainty — it was more the result of investors deciding to take some chances on stocks at discounted prices, analysts said.

"At the pace of decline of last week, we were between five and six weeks of the Dow 30 being worth zero. And, that doesn’t make sense at all," said Bob Stovall, market strategist at Prudential Securities.

Analysts also said prices will continue to fluctuate in the near term as investors ponder how much risk they are willing to take amid the political and economic uncertainty. Prices are expected to follow investors’ emotions as they did last week.

"Last week, there was kind of a panicky aspect, a throwing in of the towel. I think there is a realization that the lower prices have taken into account a lot of the bad stuff," said Charles Pradilla, chief investment strategist at SG Cowen. "That is not to say that there won’t be more pain. … We will continue to vacillate around."

Pradilla and other analysts also believe the market could stumble today when consumer confidence data is released by the New York-based Conference Board. While confidence was already waning before the attacks, it was likely that Americans grew even more uneasy afterward.

While the market anticipates consumer confidence for the month of September to be quite low, it’s more worried about how much further it will sink in the wake of the attacks. As the market has declined sharply in the last year and a half, investors have taken some solace from the fact that consumer spending remained relatively strong.

Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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