Taliban losses spark market rally

Associated Press

NEW YORK — The flight of Taliban forces from Afghanistan’s capital Tuesday gave investors a surge of optimism and sent stocks climbing sharply.

Relief that Monday’s jetliner crash in New York appeared to be an accident and not the result of terrorism added to the market’s upbeat mood. The news developments boosted the confidence of investors, with a growing number buying on the belief that the market has reached bottom, analysts said.

"If you miss the first month of a bull market, you leave a lot of performance on the table. That’s what I think you’re seeing. People are acknowledging that this bottom might be for real," said Mitch Stapley, chief fixed income officer at Fifth Third Bank in Grand Rapids, Mich. "They’re afraid of being left behind."

The Dow Jones industrial average closed up 196.58 at 9,750.95, a sharp contrast to the plunge it took in the hours after Monday’s plane crash.

Analysts said the market — which has rebounded to pre-Sept. 11 levels in recent weeks — was encouraged by what it saw as signs of progress in the fighting in Afghanistan. Opposition forces arrived in the capital, Kabul, and Taliban troops left, possibly heading for the mountains to continue their fight.

"We’ve been talking in the past couple of weeks about 10,000 and 2,000," as targets for the Dow and the Nasdaq, said Scott Bleier, chief investment strategist at Prime Charter Ltd. in New York. "We’ve been thinking about that for the end of the year, but the way things are going, we may get there before that. I think things going well in Afghanistan helps the psychological picture."

Investors also took note of the investigation into Monday’s American Airlines jet crash in New York. Authorities said it appeared to be an accident, although they did not rule out sabotage.

The optimism fueled strong buying in technology stocks despite a statement late Monday from Oracle CEO Larry Ellison that his company’s earnings in the current quarter will likely fall short of expectations. Oracle’s stock fell 88 cents to $14.52.

But investors found good news in Texas Instruments, which filed paperwork with the Securities and Exchange Commission saying the third quarter will mark the low point for semiconductor orders and that it expects to meet fourth-quarter expectations.

Texas Instruments rose $1.92 to $33.82.

"There’s a short-term ignorance of any concern in earnings," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum in New York. "It’s as if, hey, we know the bad news story but we’re looking to 2002, and right now, regardless of what’s being said, this market is looking forward, not at the current situation. That’s the story in technology."