Stocks Shake Nervous Start, End Higher - TheStreet

Updated from 4:10 p.m. EST

Stocks rallied Friday as buyers returned to the market seeking bargains in a relatively benign geopolitical atmosphere. The Dow managed to breach 8000 and all the major averages posted their second straight week of gains.

The averages bounced back from early selling that was set off when a barge exploded at an


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loading facility on New York' Staten Island. The blast and an ensuing fire killed at least one person and rattled nerves, but were later deemed an accident, not terrorist action.


Dow Jones Industrial Average

jumped 103 points, or 1.3%, to 8018, while the


ended the session up 18 points, or 1.3%, at 1348. The

S&P 500

closed up 11 points, or 1.3%, to 848.

For the week, the Dow had a 1.4% gain while the Nasdaq jumped 2.9% and the S&P 500 added 1.6%.

Market players said trading continued to be muted by the possibility of war against Iraq, but that most investors are betting on a two-week interval before any action is taken. "Whenever it looks less likely we'll go to war, we see gains, but if we get closer to war, we could have declines again," said Giri Cherukuri, senior trader at OakBrook Investments.

War prospects also contributed to the light trading volume, despite the expiration of options on stocks and indices Friday. "Given it was an options expiration day, volume was really not that great. But you can't draw many conclusions since it's a Friday and we had a shortened trading week," said Barry Berman, head trader at Robert W. Baird. "The problem is still the potential war with Iraq. Things are quiet now, but they can heat up pretty fast, so you have to be careful."

Meanwhile, investors also took the latest numbers on inflation in stride, reversing Thursday's pessimism with wholesale prices. The January Consumer Price Index rose 0.3%, the largest gain in nine months, compared with December's 0.1% increase, in line with what economists had expected. The so-called core CPI, which excludes food and energy prices, rose 0.1%, following a 0.1% rise the previous month.

The reading contrasted with Thursday's 1.6% increase in the producer price index, the largest jump in 13 years and a catalyst for that session's heavy selling in blue-chips.

Among individual stocks,


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posted a first-quarter loss of 78 cents a share, or $369 million, compared with a net loss of 68 cents a share, or $315 million a year earlier. Sales also dropped 1% to $1.41 billion on geopolitical uncertainly, the test-equipment maker said in a statement. Agilent also said it will cut 4,000 jobs in addition to the 10,500 previous layoffs. The company's shares rose 6.5% to $13.42.

Shares of


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recovered from Thursday's losses with a gain of 2.5% to $35.64 in afternoon trading. Credit Suisse First Boston analyst Lara Warner upgraded the largest U.S. local telephone company to ``outperform'' from ``neutral,'' saying the stock looks attractive after recent declines.

But other former Bell companies continued to decline after the Federal Communications Committee voted Thursday to allow states to decide whether they wanted to force local phone companies to lease their networks to competitors.



shares closed 2.5% lower at $20.76.

BEA Systems


shed 5.1% at $10.63 after the software company reported higher quarterly earnings but gave a cautious outlook. Chief Executive Alfred Chuang said, "This is the toughest economy the software industry has seen in many years." He added that it is difficult to predict earnings amid the threat of war.



added to Thursday's 8% fall, this time on a J.P. Morgan downgrade. Shares closed at $35.06 or a 0.3% gain. Thursday's selloff followed European regulators' decision to deny the biotech company access to their market for a skin disease treatment.

Treasuries were lower, with the 10-year note down 6/32 to yield 3.89%. April 2003 crude oil futures rose after Secretary of Defense Donald Rumsfeld said a sufficient number of U.S. troops were in place in the Middle East for an Iraqi invasion. The dollar fell against the euro and was little changed against the yen.

Stocks had a lower session in overseas markets, with London's FTSE 100 up 1.1% to 3727 and Germany's Xetra DAX 2.2% higher at 2648. Asian markets saw declines, with Japan's Nikkei losing 1.6% to close at 8513, while Hong Kong's Hang Seng moved down 1.5% to 9250.