Updated from 4:09 p.m. EDT
Stocks posted strong gains Thursday, with the major averages closing at their highest levels in more than a year, as upbeat economic news and strength in the financial sector outweighed concerns about Hurricane Isabel and the resignation of
New York Stock Exchange
Chairman Richard Grasso.
Dow Jones Industrial Average
ended up 113.48 points, or 1.2%, to 9659.13, its highest close since June 17, 2002. The
rose 26.45 points, or 1.4%, to 1909.55, its highest level since March 11 of last year. The
gained 13.61 points, or 1.3%, at 1039.58 -- its highest close since June 18, 2002.
"The leading indicators came out, and that looked good," said Peter Blatchford, a trader at Miller Tabak. "As far as the markets were concerned, the Grasso news was entertainment at best."
The Conference Board's index of leading economic indicators rose 0.4% in August to 113.3. In addition, initial jobless claims fell to 399,000 in the week ended Sept. 13, from a revised reading of 428,000 the previous week. Economists had expected a decline to 410,000.
Investors overlooked the Philadelphia Federal Reserve survey, which fell to 14.6 in September, below the consensus for a reading of 17 and down from 22.1 in August.
Chips were higher, and bank stocks rose 2.7% on average after
posted strong earnings and Merrill Lynch added
to its Focus 1 list. Bear Stearns was up 5%, or $3.73, at $76.20, and Citi gained 3.8%, or $1.71, at $46.65.
"The economy is improving, and I think the market is constructive," said Mike O'Hare, trader at Lehman Brothers. "Bear Stearns' numbers were really a blowout."
Bear Stearns handily beat Wall Street's estimates for the third quarter, posting a nearly 29% increase in revenue.
"Financials are starting to show decent signs of strength, and when you have the financial sector and something as significant as the semiconductors doing what they're doing, then it can filter through to the broader market," said Ben Hovermale, head trader at Wells Capital Management.
Although news of Grasso's resignation didn't affect the direction of the market Thursday, some traders said it had been a distraction. "Everyone in the industry is focusing on two things -- Dick Grasso and
hurricane Isabel," O'Hare said.
Grasso resigned Wednesday after a public outcry over his $140 million pay package. He had held the post for eight years, and he stepped down during an emergency session of the NYSE board, at which a group of directors decided the exchange couldn't withstand further controversy over his compensation.
The NYSE said it hoped to name a new chairman soon, and the board of directors will meet Friday afternoon to discuss the succession process, H. Carl McCall said at a news conference.
Meanwhile, hurricane Isabel arrived in North Carolina Thursday, and forecasters have said cities such as Richmond, Va., and Washington could face hurricane-strength winds.
Negative analyst comments on the technology sector seemed to have little impact on stocks. Goldman Sachs said that while it is convinced the chip-equipment industry has begun a cyclical upturn and that stocks won't peak until early 2004, "we believe it is likely that the stocks will trade down 15% before resuming their upward move."
In the telecom-equipment space,
was cut to reduce from neutral by UBS on the basis of valuation and lack of catalysts to improve growth. Nevertheless, shares gained 1.3%, or 3 cents, to $2.33.
was in focus a day after
agreed to acquire the financial services company for $1.5 billion in cash. Shares of MONY were up $3.77, or 13%, to $33.10.
AOL Time Warner
directors will drop "AOL" from the company name and the firm's stock will trade under the symbol "TWX," the old ticker the company had before its merger with what was then America Online. Shares gained 1%, or 14 cents, to $16.45.
said it reached an agreement with the United Auto Workers, averting a possible strike. The UAW reached tentative labor agreements with
earlier in the week.
Elsewhere, federal regulators said they will allow
to sell long-distance services in Michigan after the company failed in its first four attempts to gain access to that market.
Among the day's earnings,
posted a narrower-than-expected loss of 74 cents a share, while
beat analysts' expectations.
Overseas markets were mixed, with London's FTSE 100 up 0.5% at 4314, and Germany's Xetra DAX gaining 1.4% to 3612. In Asia, Japan's Nikkei closed 0.4% higher at 11,033, while Hong Kong's Hang Seng fell 0.6% to 11,069.
Meanwhile, the dollar lost ground against the yen but was stronger vs. the euro. Treasuries rose, with the yield on the 10-year note falling to 4.2%. Crude oil futures fell in New York.
On Wednesday, the Dow ended down 21.69 points, or 0.2%, to 9545.65, and the Nasdaq fell 4.15 points, or 0.2%, to 1883.10. The S&P 500 lost 3.35 points, or 0.3%, at 1025.97.