Blue-chip stocks rose Wednesday, giving the Dow Jones industrial average its first two-day winning streak in nearly a month, but tech stocks fell in response to a slew of bad news.
The Dow closed up 113.41, to 10,059.63, after recovering from an earlier drop of 115.49. The blue-chip index, which gained 126.35 Tuesday, had not increased for two straight sessions since April 4-5.
The broader market finished mixed. The tech-heavy Nasdaq composite index lost 10.70, to 1677.53, and the Standard & Poor’s 500 index advanced 9.54, to 1086.46.
“We’re still in a downward trend, but people are coming in and buying stocks because they perceive them to be cheap,” said Todd Leone, head of listed trading for SG Cowen Securities.
The market was disappointed by a report that said manufacturing activity grew at a slower-than-expected pace in April and by a Commerce Department report that construction spending dipped 0.9 percent in March.
That bad news drove the Dow as low as 9830.73 before blue-chip stocks rallied, fueled by good news on April auto sales and what investors thought were bargain prices.
General Motors, a Dow component, gained $1.36 to $65.51; Ford Motor rose 44 cents, to $16.34; and DaimlerChrysler picked up 91 cents, to $46.55.
Coca-Cola and Procter & Gamble helped support the Dow, with Coke rising $2.11, to $57.62, and P&G jumping $1.54, to $91.80. AT&T was the biggest winner in percentage terms among Dow stocks, increasing 84 cents, or 6.4 percent, to $13.96.
Despite the Dow’s advance, the session had a cautious tone, reflecting investors’ persistent doubts about the strength of the economy.
“What they want to see is consistently strong economic numbers and strong earnings reports, or at least not negative ones. They are not seeing all this all at once,” said Stephen Carl, principal and head of equity trading at the Williams Capital Group.
And analysts doubt that the upturn will last because lower prices haven’t been enough to sustain the market.
“The market is trying to come back, but this is nothing more than a bear market rally,” said Christopher Johnson, an analyst at Schaeffer’s Investment Research in Cincinnati.
Technology was the weak spot. Sun Microsystems fell $1.21, or 14.8 percent, to a 3 1/2-year low of $6.97 after President and Chief Operating Officer Ed Zander announced his retirement after more than 15 years at the company.
WorldCom closed down 27 cents, to $2.21, one day after it announced Chief Executive Bernard Ebbers had resigned. Overture Services sank 35.7 percent, or $12.20, to $21.99 after ending its U.S. search distribution relationship with America Online.
Shares of Oracle fell 59 cents, or 5.9 percent, to $9.45, its lowest level since September 1999, after one analyst lowered the software firm’s earnings forecast. Shares of Oracle have fallen 32 percent this year, costing shareholders more than $25 billion.
And Peregrine Systems, which makes software that helps companies oversee their assets, fell $3.40, to $3.45, after the firm delayed the release of its quarterly results because its new auditors need more time to complete work taken over from Andersen. The stock was the biggest loser in percentage terms on the Nasdaq market, tumbling almost 50 percent.
Two local companies shared the pain.
The stock of WMS Industries of Waukegan slipped after analysts cut estimates and investment ratings, citing the company’s slot machine problems. Goldman Sachs analyst Steven Kent downgraded the maker of gaming devices to “market underperformer” from “market performer” on a worsening earnings outlook. WMS stock fell $1.11, or 6.9 percent, to $15.
Shares in Chicago-based video game publisher Midway Games tumbled after the company said it would push some of its most important titles into the second half of the year. Gerard Klauer Mattison analyst Edward Williams said shifting the release of major titles was cause for concern because their timely arrival at retail stores was crucial to Midway’s fortunes. Midway shares fell $1.55, or 11.4 percent, to $12.10.
