Updated from 4:06 p.m. EDT
Stocks leapt in the final hour of trading Tuesday, shrugging off earlier uncertainty amid
Chairman Alan Greenspan's comments on tight supplies of natural gas.
Rallying more than 60 points in the last hour, the
Dow Jones Industrial Average
ended up 74 points, or 0.8%, at 9054, while the
gained 23 points, or 1.5%, to 1627. The
rose 8 points, or 0.9%, to 984.
Greenspan told a House panel regarding gas prices, "We are not apt to return to earlier periods of relative abundance and low prices anytime soon." Greenspan stressed that as with crude oil, American markets need unlimited access to natural gas in order to thrive, sounding a cautious note that temporarily cooled a market rally.
But price action was mostly positive on Tuesday, and bullish sentiment surfaced in the final hour. Traders are expecting volatility in coming sessions, reflecting investors' ambivalence over keeping the rally going and taking profits during the second-quarter preannouncement season. Going by recent warnings, it is possible that upcoming earnings won't be overwhelmingly positive, and that the market is due for a breather.
"I think we're in early stages of building near-term top in market," said Ken Tower, market strategist for CyberTrader. "Friday morning we were up sharply, but by afternoon we had given it all back. That probably signals the end of the terrific uptrend seen since March 12. Over the next few days, we'll back ... and eventually head into some decline that takes us back around the mid-May lows. That's a standard reaction to such a sharp advance. Long-term we're in good shape. In the next month, we're in some trouble."
While data were scarce Tuesday, bulls took heart in the Blue-Chip Economic Indicators survey, a poll of 53 economists, which forecast that GDP will grow 2.4% in 2003, up from 2.3% in May.
said Tuesday that its second-quarter sales could be at the low end of expectations because of a sluggish economy, a weak dollar and the SARS virus. But the world's largest handset maker stuck to previous earnings estimates and provided a fairly bullish outlook for its network segment. Analysts reacted negatively to the news, with Wells Fargo Securities downgrading it to sell from hold, with a $12 price target.
The news comes a day after
warned that sales and earnings for the quarter would fall short of expectations. Nokia's American depositary shares fell 25 cents, or 1.4%, to $17.71. Some of Nokia's peers were gaining, including network giant
, which added $1.02, or 9.9%, to $11.35.
While most companies are just entering the preannouncement season, one is ahead of the game with earnings results Tuesday. Homebuilder
is expected to report a profit of $1.69 a share in its second-quarter results after the close. Lennar shares gained $2.49, or 3.7%, to $69.75.
Ahead of the report, Lehman Brothers raised its price target on the company to $80 from $65. Lehman was also upbeat on other homebuilders, such as
. The Dow Jones Home Construction Index gained 3.3%.
, which just emerged from bankruptcy a month ago and began trading at $14 as an over-the-counter stock, extended its rally on its first day of trading on the Nasdaq, gaining $1.90, or 10.7%, to $19.60.
announced plans to launch an online DVD rental service that would cost $15.54 a month, undercutting pioneer
by more than $4. NetFlix shares fell 30 cents, or 1.3%, to $22.70, while Wal-Mart gained 97 cents, or 1.8%, to $54.76.
On the research front, biopharmaceutical concern
was downgraded at UBS Warburg to reduce from neutral on valuation, competition and patent expiration concerns. Biogen shares fell 28 cents, or 0.6%, to $44.
Another drug company under scrutiny today is British drug giant
, which conceded that its antidepressant Seroxat caused heightened suicidal thinking in some young patients. Despite this, GSK gained 19 cents, or 0.5%, to $41.67.
shares dropped $1.63, or 4.7%, to $32.98 after the company announced it would be buying another 100 Embraer 190 aircraft in a deal valued at $3 billion. The company has options to purchase another 100 planes, potentially doubling the deal, but increasing fears the company could be growing too fast, too soon.
gained 33 cents, or 0.6%, to $58.82, despite being cut to underperform from market perform at Wachovia, which cited "headline risk" due to potential management changes. Merrill Lynch downgraded
to neutral from buy based on valuation concerns. Gillette fell 14 cents, or 0.4%, to $33.29, while Colgate fell 14 cents, or 0.2%, to $58.63.
Banc of America downgraded semiconductor equipment stocks, dropping
to neutral from buy, saying the current rally is unsustainable.
fell 14 cents, or 2.6%, to $5.39, while
fell 7 cents, or 0.9%, to $7.61, after UBS Warburg downgraded both to reduce from neutral based on valuation.
shares gained $1.14, or 3.4%, to $34.31, after Banc of America upgraded the company to buy from neutral, boosting its price target to $45 from $28, telling investors the beleaguered airline industry is turning the corner.
founder Samuel Waksal received seven years and three months of jail time and will pay a $3 million fine for his role in the insider trading scandal involving his family and friend Martha Stewart. ImClone gained 84 cents, or 2.4%, to $36.30.
Overseas markets were mixed, with London's FTSE 100 ending down 0.4% at 4113 and Germany's Xetra DAX ending up 1.5% at 3140. In Asia, Japan's Nikkei closed 0.4% lower at 8789, while Hong Kong's Hang Seng fell 0.3% to 9703.
After Monday's strong rally, Treasuries were relatively unchanged, with the yield on the 10-year at 3.22%. Crude oil futures were down to $31.20 a barrel in London, while the dollar was slightly weaker against the yen and the euro.
On Monday, the Dow ended down 82.79 points, or 0.9%, at 8980.00. The S&P 500 fell 11.83 points, or 1.2%, to 1603.93, while the Nasdaq closed down 23.45 points, or 1.4%, at 1603.97.