Stocks rebound with big gains

By LISA SINGHANIA

Associated Press

NEW YORK – Stocks shot higher today, buoyed by rebounds in technology and blue chip issues as Wall Street regained a tentative footing amid uncertainty about corporate profits. But an earnings warning from Apple Computer after the close of trading threatened to send Wall Street back on its downward trek.

Apple’s stock tumbled nearly 44 percent in extended-hours trading, and also brought other high-tech issues lower, making it quite possible that today’s dramatic upturn would be short-lived. The market already took a beating the first three sessions this week on concerns about third-quarter profits.

“We should see a generally mixed market Friday and a downward bias in tech stocks and the averages,” said Dan Ascani, president and research director at Global Market Strategists in Gainesville, Ga. “The earnings warning illustrates we’re still not out of the woods yet.”

In the regular session, the Dow Jones industrial average closed up 195.70 at 10,824.06, its highest close this week and the blue chips’ biggest advance since it rose 198.41 on May 15.

Broader stock indicators also had big gains. The Nasdaq composite index rose 122.02 to 3,778.32 and the Standard &Poor’s 500 index was up 31.72 at 1,458.29.

Apple rose $4.56 to $53.50 in regular trading, but after the computer maker warned late today that its quarterly profits would be “substantially below expectations,” it dropped nearly 44 percent to $23.48 in after-hours trading.

Stocks have been down for most of September on worries about corporate profits – in particular when high-profile technology companies including Intel have warned of disappointing results. Apple, also considered an indicator of the high-tech sector’s health, could have a similar effect on the market.

The market’s unease has been compounded by energy prices that are at decade-high levels and a weak European currency – factors that many companies say will hurt their profits.

In regular trading today, the market advanced on a mix of bargain-hunting and end-of-the-quarter trading.

Investors appeared unfazed by a Commerce Department report today that showed the economy expanded at an annual rate of 5.6 percent between April and June, a faster rate than the 4.8 percent growth in the first three months of 2000. The report also showed inflation, which has been the primary concern of the Federal Reserve as it raised interest rates over the past 15 months, was moderating even as the economy surged.

The market remained focused on corporate earnings. Procter &Gamble jumped $5.13 to $67 after the consumer products maker said it would meet Wall Street expectations for the third quarter. P&G has suffered disappointing results in recent quarters.

But profit-taking investors unloaded Safeway, trading it down $4.75 to $49.38 after the grocery company reported profits in line with analysts’ estimates.

Internet and telecom stocks also emerged from a slump.

Cisco Systems was up $2 at $59.31 in the regular session, despite a downgrade by a Sanford Bernstein analyst. It dropped $1.25 in extended-hours trading.

Lucent also moved higher, trading up $2.75 at $31.31, but slipped 50 cents in the extended session.

Web portal Yahoo! was up $5.31 at $95.69, gaining back nearly half of its loss Wednesday, but then retreated 94 cents after-hours.

Financial services stocks moved higher as well. Citigroup climbed $1.50 to $53.88, but gave back most of that gain in after-hours trading, falling $1.13. Dain Rauscher, a regional brokerage firm, rose $13 to $92.88 after announcing it was being acquired by the Royal Bank of Canada in a $1.5 billion deal. It was unchanged after-hours.

“You’re getting some good boost of stocks that have been bludgeoned as of late,” said Charles White, portfolio manager at Avatar Associates, said of the regular session. “You may have a little bit of bargain hunting going on … and a little bit of relief that we’ve gone one day maybe without a company announcing a complete disaster.”

Portfolio managers were also buying in advance of the end of the third quarter.

Advancing issues outnumbered decliners by a more than 2-to-1 margin on the New York Stock Exchange. Consolidated volume came to 1.43 billion shares, ahead of the 1.39 billion in the previous session.

The Russell 2000 index was up 15.68 at 523.81.

Overseas, Japan’s Nikkei stock average fell 0.08 percent. Germany’s DAX index was up .27 percent, Britain’s FT-SE 100 dropped 0.08 percent, and France’s CAC-40 fell 0.13 percent.