Stocks higher on renewed confidence in economy

AP Business Writer

NEW YORK (AP) -- Wall Street gained momentum Thursday, surging higher for the second straight day on the Federal Reserve's positive outlook for the economy. The Dow Jones industrials rose by triple digits, bringing its two-day advance to more than 300 points.

Investors are feeling more confident that business is poised to turn around following the Fed's statement Wednesday that the economy is strengthening. Better-than-expected earnings from Procter & Gamble added to the gains, while an analyst upgrade of Intel helped technology stocks.

Still, there were some signs of lingering caution, including some early selling in the tech sector.

The Dow Jones industrial average closed up 157.14, or 1.6 percent, at 9,920.00, exceeding Wednesday's 144.62-point climb, according to preliminary calculations. The biggest contributor to the Dow's gain was P&G.

The broader market also finished higher. The Nasdaq composite index rose 20.67, or 1.1 percent, to 1,934.11 following Wednesday's 20-point win. The Standard & Poor's 500 index advanced 16.64, or 1.5 percent, to 1,130.21 after gaining 12 points Wednesday.

Analysts credited much of the two-day winning streak to long-awaited signs that the economy is recovering. Besides the Fed, investors were encouraged by news Wednesday that the economy grew at a 0.2 percent annual rate in the fourth quarter. That increase could signal that the recession ended late last year or early in 2002.

Thursday also produced good economic news as the Labor Department reported that Americans' incomes increased a solid 0.4 percent in December, after flatlining the month before.

"What we have seen this week is that we have turned the corner. We have left the recession behind," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.

Procter & Gamble soared $3.39 to $81.68 after surpassing quarterly earnings expectations by a penny a share and reaffirming its projections for fiscal 2002. The maker of Crest and Tide, which also posted its first sales increase in a year, was the strongest Dow stock.

Another consumer products maker, Kraft Foods, climbed $1.56 to $37.06 after Wednesday raising its 2002 earnings projections beyond analysts' expectations.

Other blue chip gainers included Home Depot, up $1.02 at $50.09, and J.P. Morgan Chase, which rose 99 cents to $34.05.

Chip maker Intel, also a Dow industrial, gave the tech sector some lift, rising $1.18 to $35.04 after its shares were upgraded by Merrill Lynch.

Other tech advancers were IBM, up $2.34 at $107.89, and Oracle, which gained 64 cents to $17.26 on an upgrade from Prudential Securities.

Also in tech trading, shares of Hewlett-Packard and Compaq Computer posted moderate gains following clearance of their $23.6 million merger from the European Union. H-P inched up 15 cents to $22.11, while Compaq rose 36 cents to $12.35.

Analysts said bargain hunting also factored into Thursday's advance as buyers took advantage of cheaper prices following a big selloff Tuesday, when the Dow tumbled 247.51, its biggest one-day point drop in three month. Worries about companies accounting procedures, precipitated by the collapse of Enron, were cited as the biggest factor in that drop.

"I continue to believe that we are in a major recovery from late September lows. ... We have had a setback because of the Enron situation. Everyone got a bit frightened," said Al Mirman, strategist at V Finance in Sarasota, Fla.

Thursday's upturn also came despite mildly disappointing economic data as the Commerce Department reported consumer spending slipped 0.2 percent in December.

Advancing issues outnumbered decliners nearly 2 to 1 on the New York Stock Exchange. Volume came to 1.52 billion shares, down from Wednesday's 1.97 billion.

The Russell 2000 index, which measures the performance of smaller company stocks, rose 3.38, or 0.7 percent, to 483.10.

Overseas, markets were higher Thursday with Japan's Nikkei stock average finishing up 0.8 percent. In Europe, France's CAC-40 Britain's FT-SE 100 each and Germany's DAX index all gained 1.1 percent.

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