NEW YORK (Reuters):
STOCKS ROSE in a late-day rally yesterday as investors swooped in to snap up bargains, including Ford Motor Co., and shake off the gloom over impending war in Iraq.
Stocks were headed for a third straight day of losses as a looming U.S-led attack on Iraq again weighed on sentiment, but in the last half-hour stocks turned positive in heavy trade.
"It's like when you're in the middle of the storm you can pick up your head and wipe off your brow," said Robert Mikkelsen, managing director of institutional sales and trading at The Advest Group Inc. "It's nice."
Mikkelsen said investors were taking advantage of low prices after a hammering that had pushed the blue-chip Dow close to multiyear lows set in early October.
The blue-chip Dow Jones industrial average ended with a gain of 28 points, or 0.37 per cent, at 7,552.07.
The broader Standard & Poor's 500 Index was up 3.46 points, or 0.43 per cent, at 804.19. Earlier the index fell below the psychological barrier of 800 points.
The technology-laced NASDAQ Composite Index gained 7.77 points, or 0.61 per cent, at 1,279.24.
Among gainers, Ford rose 7.3 per cent, or 48 cents, to US$7.08 after UBS Warburg analyst Saul Rubin raised his rating to "neutral" from "reduce," saying the market was "unduly pessimistic" about Ford's short-term prospects.
Shares of Duke Energy Corp. jumped after the utility said it would cut capital expenditure by US$200 million this year to free up cash to pay down debt. Duke rose 6.7 per cent, or 84 cents, to $13.25.
But Exxon Mobil Corp., the world's biggest oil company and a Dow 30 component, lost 51 cents, or nearly 1.48 per cent, to close at US$34.06. The stock got hit after J.P. Morgan. said it cut its investment rating on global oil stocks to "neutral" from "overweight," saying the group's shares were close to peak levels and could struggle to outperform further.
Shares of AOL Time Warner lost nearly 4 per cent, or 42 cents, to US$10.69 in heavy trade on the New York Stock Exchange on fresh concerns that federal probes into the accounting practices of its America Online division could be widening.
Trading was heavy with more than 1.5 billion shares changing hands on the New York Stock Exchange and about 1.5 billion shares traded on NASDAQ.
WAR FEARS REIGN
Fears about an impending U.S-led attack on Iraq weighed on shares for most of the day, analysts said.
"Geopolitical jitters are dominating the activity in the stock markets around the world," said Alan Ackerman, senior vice-president and market strategist with Fahnestock and Co.
"The markets here and abroad are hitting multiyear lows and that continues to challenge confidence," he said.
Seeking to avert a stand-off over a U.N. Security Council resolution on Iraq, Britain gave Iraq President Saddam Hussein six stiff conditions to avert war, including a televised pledge by Saddam to give up weapons of mass destruction.
"People are nervous to put money to work because of fear over the geopolitical situation," said Michael O'Hare, head of block trading at Lehman Brothers. "Fear brings out selling. It's as simple as that."
AOL, AMR, CISCO FALL
Shares of AOL were hit after the Washington Post said federal investigations into the company and two of its former executives on accounting matters were widened. An AOL Time Warner spokeswoman declined to comment.
AIRLINE STOCKS CONTINUED
TO BE IN THE SPOTLIGHT
Shares of AMR Corp., parent of American Airlines, gave up 18 cents, or more than 11 percent, to close at US$1.41, adding to Tuesday's 34 per cent drop. On Tuesday, the Air Transport Association, which lobbies for major U.S. carriers, said airlines might slash 70,000 more jobs and suffer US$10.7 billion of annual losses if there is a war against Iraq.
