Rallies lift stock indexes, buoy investor hopes

NEW YORK -- Investors had news to cheer about when the Dow Jones industrial average closed above 9,000 for the first time in nearly 10 months Wednesday -- a nice boost, especially after three years of dreadful declines.

"It's important psychologically," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "It is a return to last summer's highs. It is also one of those round numbers we like to see the market break through, because round numbers tend to give technical resistance and support."

The Dow on Wednesday soared more than 100 points to close at 9,038.98, having last finished above 9,000 on Aug. 22. Still, the Dow remains nearly 23 percent below its all-time high of 11,722.98, which it reached on Jan. 14, 2000.

The other gauges have smashed through resistance levels. The Nasdaq composite index on Tuesday closed above the 1,600-mark, which had eluded it since May 31, 2002. The Standard & Poor's 500 index, the broadest of the main benchmarks, is at levels not seen since July.

Markets reversed themselves somewhat by press deadlines Thursday, with the Dow Jones industrial average down 30.60, or 0.3 percent, at 9,008.38 in late morning trading.

The broader market also retreated. The Nasdaq composite index fell 3.95, or 0.2 percent, to 1,630.70. The Standard & Poor's 500 index declined 0.83, or 0.08 percent, to 985.41.

Some pullback was expected following Wall Street's recent gains. At the end of Wednesday's trading, the Dow had risen 20.1 percent, the Nasdaq had gained 28.6 percent and the S&P had climbed 23.2 percent since March 11.

"I believe that this is part of a trend," Johnson said of the gains. "Any weakness is going to be short-lived."

Other market analysts share Johnson's optimism, pointing to a variety of encouraging signs. Profits are improving as evidenced by better-than-expected first-quarter earnings at most companies. Economic data has also been strengthening.

Trading volume, thin for most of the year, has recently been heavy.

Bob Armknecht, portfolio manager of the Liberty Equity Growth Fund at Columbia Management Advisors in Boston, said the stock market was gaining momentum as investors anticipated further signs of a recovery later this year.

"People have a sense that everything is there for things to get better," Armknecht said.

Wall Street is also heartened by the fact that bad news has lately affected only the companies or industries involved, instead of toppling the whole market as in recent years when the bears ruled.

Wednesday's rally, for example, came despite a warning from DaimlerChrysler that its Chrysler division will likely post an operating loss of about $1.2 billion for the second quarter -- a serious setback in the company's efforts to turn around the division.

Auto stocks declined, but overall advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange.

And, the market advanced on Tuesday despite news of a federal investigation into IBM's bookkeeping. Dow industrial IBM fell, but the Dow itself and the tech-laden Nasdaq managed modest gains.

The explanation, said Michael Murphy, head trader at Wachovia Securities: "People are now looking for reasons to buy stocks, not sell them."

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