NEW YORK — Wall Street followed one of its worst weeks with one of its best in a strong rally Friday that helped the Dow Jones industrials recover nearly half their losses from the Sept. 11 terrorist attacks.
The Standard &Poor’s 500 and Nasdaq composite stock indexes also made significant recoveries from their lows as investors, while mindful of the fragile economy and upcoming third-quarter earnings reports, bet on bargain stocks.
"You had this huge loss last week on a lot of fear and concern, and prices became depressed," said Ralph Acampora, director of technical research at Prudential Securities. "We call that an oversold marke, and at some point you get a relief rally, and that’s what this is — a nice technical bounce."
The Dow has now made back 44 percent of its loss from the week ending Sept. 21, when trading resumed after the Sept. 11 attacks; the Nasdaq has recovered 27 percent while the S&P 500 has gained 54 percent.
Still, analysts cautioned that the market might test its recent lows again. Stocks are trying to right themselves after the shock of the attacks, but the extent of the economic fallout from the tragedies and any U.S. military response remains unknown — and a possible wildcard for an already skittish market.
"It’s very much of a psychological battle in investing right now," said John Forelli, portfolio manager for John Hancock Core Value Fund. "We don’t know if there’s going to be more terrorist attacks and, if companies do fall short of expectations when they start reporting earnings, stocks will still go down."
"Whether we’ve seen a bottom is the big question, and I don’t think we have," said Acampora, the Prudential analyst.
The gains came on the last trading day of the third quarter. Such days can be volatile as fund managers adjust their portfolios, but Friday, the market moved consistently higher in brisk trading.
Financial stocks surged, lifted by gains in American Express, up $1.60 at $29.06, and Citigroup, up 63 cents at $40.50.
Tech and retail stocks also showed strength. Home Depot gained $1.47 to $38.37, while IBM advanced $2.30 to $92.30.
But Boeing fell 90 cents to $33.50 on ongoing worries the aircraft manufacturer will be hurt by Americans’ fear to fly in the aftermath of the terrorist attacks.
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