Stocks rally for second straight session, this time on strong retail figures

By Lisa Singhania, The Associated Press
Wednesday May 15, 2002

NEW YORK — Better-than-expected April retail sales sent stocks sharply higher Tuesday, extending Wall Street’s winning streak to two sessions, as investors grew more confident about consumer spending. The Dow Jones industrials surged nearly 190 points, its third triple-digit finish in five trading days. 

Volume was also heavy, suggesting that investors were feeling more confident about stocks. But analysts were reluctant to predict the gains would last — noting recent rallies have faded. 

“We’re getting a nice follow-through from Monday, and it’s good to see tech stocks doing well,” said Ralph Acampora, director of technical research, Prudential Securities. “I’d love to say this is the beginning of something big, but that would be premature. This is a good short-term move.” 

The Dow finished up 188.48, or 1.9 percent, at 10,298.14, adding to a 169-point gain from Monday. It was also the highest close since April 16, a month ago, when average stood at 10,301.32. 

Buying in technology stocks helped lift the Nasdaq composite index 66.51, or 4.0 percent, to 1,719.05. The Standard & Poor’s 500 index was up 22.72, or 2.1 percent, at 1,097.28. Both indexes last closed higher on April 23. On Monday, the Nasdaq rallied 51, the S&P gained 19. 

The Commerce Department said retail sales rose 1.2 percent in April, the biggest increase in six months and a stronger showing than many analysts predicted. The data was the latest indication that consumer spending — which accounts for two-thirds of the economy — remains vigorous. 

Investors were also pleased by better-than-expected quarterly results from two big retailers. Wal-Mart rose $2.35 to $57.39 on first-quarter earnings that rose 19.4 percent from a year ago. Higher-than-expected first-quarter earnings also boosted J.C. Penney up $1.69 to $24.89. 

Home improvement retailer Home Depot rose $2.36 to $47.98. 

Technology stocks also fared well. Intel surged $1.63 to $30.15 after an analyst at Robertson Stephens upgraded the chipmaker. 

But WorldCom fell 20 cents to $1.24 on word it was being removed from the S&P 500. 

Pharmaceutical and tobacco stocks, two areas viewed as less risky but less lucrative investments, also struggled as investors shifted money into technology and other sectors. Johnson & Johnson slipped 80 cents to $61.04, while Philip Morris dropped 83 cents to $54.91. 

Although the indexes have managed three significant rallies in the past week, skepticism remains. Much of the recent buying has been bargain hunting in response to weeks of selling, including the drop that followed a 305-point gain in the Dow and 122-point advance in the Nasdaq last Wednesday. 

That particular rally was sparked by better-than-anticipated profits from Cisco Systems, and investor sentiment remains closely tied to individual company news. 

Applied Materials shares rose sharply on Monday and Tuesday in anticipation of strong earnings, and Wall Street wasn’t disappointed. After the closing bell Tuesday, the semiconductor equipment maker reported second-quarter results ahead of expectations and expressed cautious optimism about the future. Applied Materials advanced $1.07 to $27.71 in extended trading, adding to a regular-session gain of $1.06. 

A recovery in the semiconductor sector is seen a necessary precursor for a broader turnaround, so Applied Material’s results were a possible catalyst for further gains. Although analysts cautioned against getting too excited, they said Tuesday’s performance did suggest that conditions were improving. 

“We’re starting to see broader evidence of strength. Last week it was Cisco, Monday we got encouraging news from the chip sector and today it was retail sales,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “If this hold, I think it’s important and suggests that we could add to these gains.” 

Advancing issues led decliners more than 2 to 1 on the New York Stock Exchange. Consolidated volume came to 1.71 billion shares, compared with 1.33 billion shares Monday. 

The Russell 2000 index rose 12.00, or 2.4 percent, to 511.72. 

Overseas, Japan’s Nikkei stock average advanced 0.2 percent. In Europe, Germany’s DAX index gained 1.3 percent, Britain’s FTSE rose 0.7 percent, and France’s CAC-40 increased 1.6 percent.