Late Rally Lifts Stocks to Higher Close - TheStreet

Updated from 4:01 p.m. EDT

Stocks spent the bulk of the session Wednesday in negative territory but after a late rally the major averages closed higher, breaking a two-day losing streak.

The

Dow Jones Industrial Average ended with a gain of 52.17 points, or 0.5%, to 10,157.88. The

Nasdaq added 9.27 points, or 0.6%, to 1673.45, and the

S&P 500 rose 6.14 points to 1086.02.

Before coming to life in the last half hour of the day -- possibly as a result of a rumor, subsequently denied by the U.S. military, that Osama bin Laden had been captured -- the indices were under pressure. The lack of buying interest that dominated the session followed an

FBI

warning about a potential terrorist attack in New York, this time naming city landmarks as possible targets, including the Statue of Liberty and the Brooklyn Bridge.

Reports of a suspicious package on the Brooklyn Bridge prompted authorities to briefly close it early Wednesday while a bomb squad investigated. Nothing dangerous was found.

Meanwhile, in the Middle East, another bombing hit Israel. According to reports, a bomber detonated a blast at a pedestrian mall in the town of Rishon Letzion, south of Tel Aviv. Several people were reportedly wounded.

Back in the business realm, apparel retailer

Gap

(GPS) - Get Report

announced that 19-year company veteran Mickey Drexler will step down as chief executive on the heels of another difficult quarter for the company.

Drexler was widely credited with bringing Gap to the top of the retail clothing industry, but he said Tuesday that he will step down once the company finds a new chief. Citing a need for new leadership, Gap said it will seek to find a successor as quickly as possible. Drexler, 57, has been CEO since 1995. Shares of Gap dropped 15% to $13.55.

A big acquisition made headlines in the banking industry, where

Citigroup

(C) - Get Report

said it would acquire California thrift

Golden State Bancorp

(GSB) - Get Report

for about $5.8 billion. Golden State's shares rose 7.8% to $39.34, and Citigroup was off 0.6% to $45.

Earnings reports continued to trickle in, including the quarterly results from

AutoZone

(AZO) - Get Report

, the nation's largest auto parts merchant. The company reported a 61% rise in quarterly earnings, posting a third-quarter profit of $102.3 million, or 96 cents a share, compared with $63.5 million, or 56 cents a share, a year earlier. AutoZone was up 5.5% to $76.67.

Johnson & Johnson

(JNJ) - Get Report

, the big maker of drugs and health care products, said preliminary results of its clinical trial of drug-coated stents showed they were successful in preventing heart arteries from being reclogged. The company said the study revealed that just 2% of patients treated with the devices developed restenosis, a condition that clogs the arteries of about 25% to 30% of stent implant patients. The company's shares rose 2.2% to $62 on the news.

Mobile handset maker

Nokia

(NOK) - Get Report

took a 10% stake in broadband equipment outfit

Redback Networks

(RBAK)

, as it tries to offset declining market share in the cell phone business. Redback's shares jumped 18.5% to $2.69, while Nokia shed 3.3% to $14.90.

MCI

(MCIT)

and

WorldCom

(WCOM)

were among the big Nasdaq movers of the day. After the close Tuesday, WorldCom said the current trading structure, two tracking stocks, will be terminated in July, and the company will have only one stock. The move should save about $284 million a year because of the elimination of the MCI dividend. WorldCom was up 16% to $1.65, and MCI gained 38% to $2.82.

Elsewhere in the technology sector, Credit Suisse First Boston raised its investment rating on

PeopleSoft

(PSFT)

to buy from hold, citing the stock's attractive valuation. But the upgrade was offset when Goldman Sachs trimmed its estimates on a number of software stocks, including PeopleSoft. Shares of the enterprise software developer finished up 0.5% to $20.14.

U.S. Treasury issues were higher. Around 4 p.m. EDT, the 10-year note was up 8/32 to 98 5/32, yielding 5.11%. The bond was even stronger.

European markets were lower. London's FTSE 100 was down 0.9% to 5152, but Germany's Xetra DAX fell 1.3% to 4920. In Asia, Japan's Nikkei 225 rose 1.4% to 11,962, and Hong Kong's Hang Seng finished up 0.4% to 11,795.