Stock prices rallied for a second day Tuesday, led by bargain-hunting in old-line but highly liquid industrial and financial stocks.
Nasdaq stocks eked out a gain, despite a poor showing by several Nasdaq favorites, including Microsoft and Cisco Systems. Semiconductor stocks continued their recent rally, pulling the Nasdaq market higher.
But the bigger story of the day was found in so-called old-economy companies such as Minnesota Mining and Manufacturing, which gained $6.25, to $89.12, apparently reflecting a rotation from soaring tech stocks to lagging blue chips.
The Dow Jones industrial average closed up 198.25 points, or 1.9 percent, to 10,718.09. The gain removed the Dow from the grip of a 10 percent correction, entered on Friday. As of Tuesday’s close, the Dow stood 8.6 percent below its closing peak of 11,723 on Jan. 14.
Procter & Gamble, another of the 30 Dow industrial stocks that has lagged tech stocks for weeks, added $3.87, to $95.75, on an upbeat revenue forecast and rumors, which the company declined to comment on, that it will merge with Gillette.
Among blue chips posting better-than-expected quarterly results Tuesday were Wal-Mart Stores, CBS and Deere. Shares of CBS and Deere rose, but Wal-Mart fell after the company said higher energy and labor costs might eat into results for the current year.
Early in Tuesday’s session, the government reported a stronger-than-expected gain in U.S. industrial production in January, the biggest growth in 18 months.
The news, which added evidence that the current economic expansion remains strong, was expected to depress interest-sensitive industrial stocks. Instead, the industrial sector of the market warmed to the prospect of greater sales growth and profit gains.
In particular, higher prices for oil, which held above $30 a barrel in New York futures trading for a second straight day, boosted shares of oil producing companies. Schlumberger rose $4.50, to $65. Exxon Mobil added $2.87, to $79.31.
The Standard & Poor’s 500 index advanced 12.11, to 1402.05. New York Stock Exchange volume picked up from Monday’s slow start, with 1.08 billion shares changing hands.
NYSE breadth remained positive for a second day, as winning stocks held a slight edge over losers.
The Nasdaq composite index, for the second day in a row, spent most of the session in negative territory, at one point sliding nearly 130 points. But the index closed with a modest gain of 2.22, to 4420.77. Nasdaq breadth was negative, as losing stocks outnumbered winners by about a 4-3 ratio.
Among Nasdaq winners, Applied Materials added $5.44, to $166.50, in the regular Nasdaq session, helped by upbeat remarks by a Prudential Securities analyst. Shares were changing hands at $171 in late electronic trading. In addition to beating Wall Street estimates with its fiscal first quarter earnings per share, the company late Tuesday declared a 2-for-1 stock split.
Internet portal Lycos also rallied in late Nasdaq trading after posting fiscal second-quarter results that topped Wall Street estimates.
Semiconductor giant Intel added $2.12, to a record closing high, $112. Specialty chipmaker PMC-Sierra rose $23.84, to a record closing high $153.97. The semiconductor stock index traded at the Philadelphia Stock Exchange advanced 3 percent to a record closing high.
The Russell 2000 index of small-company stocks, which has displayed remarkable resiliency in the recent market downturn, added 0.30, to 540.24, just 2 points from its record closing high, set Thursday.
Treasury securities slipped ahead of key economic reports Thursday and Friday and congressional testimony by Federal Reserve Board Chairman Alan Greenspan on Thursday.
Local news: Chicago-based transportation equipment lessor GATX gained $1.75, to $31, on word Monday that Berkshire Hathaway, the investment holding company controlled by Warren Buffett, has taken a 5.4 percent stake in the company. Separately, PaineWebber issued a “buy” recommendation on Berkshire Hathaway, which hit a two-year low last week.
Chicago-based Tribune Co., which publishes the Chicago Tribune, boosted its quarterly dividend by 11 percent, to 10 cents a share from 9 cents. The new dividend is payable March 9 to shareholders of record Feb. 24.
