The stock market staged a modest rally Wednesday, snapping its five-session losing streak.
“It was an automatic reflex–a knee-jerk reaction–after the sharp declines,” said analyst William Hummer, of Chicago-based Wayne Hummer Investments Inc. “There was no specific news to trigger it.”
The Dow Jones industrial average, after climbing about 90 points during the afternoon, slipped back to finish 52.56 points higher, at 8951.52, a gain of 0.6 percent.
The closely followed market barometer had plunged almost 286 points since April 21 amid speculation that the Federal Reserve might boost interest rates to curb a strong economy and threat of inflation.
The rebound was led by computer and electrical-equipment firms on the expectation that a strong economy will boost profits.
Although the fears of higher rates abated somewhat, bond tradersremained cautious. Bond prices were little changed, and yields remained near the highest levels of the year.
Advancing issues led losers by about an 8-5 ratio on the New York Stock Exchange.
Among more broadly based market measures, the Standard & Poor’s 500-stock index rose 9.52, to 1094.63, or 0.9 percent.
Buoyed by a continuing surge in Internet stocks, the technology-dominated Nasdaq index gained 19.87, or 1.1 percent, to 1851.64. The Russell 2000 index of smaller companies added 4.44, or 0.9 percent, to 476.98.
“There still are a lot of questions on the Fed’s mind,” said Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson, a Chicago bond house. “A debate is taking place inside the Fed. But the economy is still in good shape.”
Lucent Technologies passed its former parent, AT&T, in market capitalization, on investor belief that Lucent will take a large share of the worldwide phone equipment market. Lucent shares rose $1.81, to $74.19, valuing the company at $98.36 billion. AT&T fell 31 cents, to $59.25, cutting its value $95.99 billion.
The stock of Chicago-based Borg-Warner Automotive fell $4.25, or about 6 percent, to $61. The company said it was being affected by production changes at Ford Motor Co., which has reduced its demand for four-wheel-drive truck systems.
Shares of Chicago-based gum-maker Wm. Wrigley Jr. popped $4.12, to $86.37, after touching a 52-week high of $86.56.
W.W. Grainger shares jumped $4.19, to $107.56, after the Lincolnshire firm restored its stock repurchase program to 5 million shares from less than 2 million.
MAF Bancorp, a bank-holding company in Clarendon Hills, announced a 3-for-2 stock split and dividend increase to 10.5 cents a share from 7 cents. MAF stock rose 37 cents, to $40.25.
