US stocks rose as a report that two sons of Osama bin Laden had been captured triggered a rebound from initial losses.
Share prices fell after the economy unexpectedly lost jobs last month and Intel Corp said first-quarter sales wouldn't meet its highest forecast. They moved higher even though the White House said it couldn't confirm the Associated Press report on the al-Qaeda leader's sons.
"Everything is hinged on anything related to terrorism, bin laden, or Iraq," said Michael O'Hare, head of listed trading at Lehman Brothers Inc, the world's fourth-biggest securities firm. "Any positive piece of news and the market's going to fly."
PHOTO: AP
Anything negative, and it's going to drop."
The Standard & Poor's 500 Index rose 6.79, or 0.8 percent, to 828.89. Consumer-related shares such as Wal-Mart Stores Inc contributed more than a quarter of the gain. The Dow Jones Industrial Average climbed 66.04, or 0.9 percent, to 7,740.03.
The NASDAQ Composite Index added 2.40, or 0.2 percent, to 1,305.29. Declines in computer-related shares such as Intel limited the advance.
All three measures nevertheless slid for a second week as the threat of a US-led war against Iraq undermined consumer confidence and prompted some businesses to delay investing and hiring. The S&P 500 lost 1.5 percent, the Dow shed 1.9 percent and the Nasdaq dropped 2.4 percent.
Shares sank to the day's lows in the first five minutes of trading after the Labor Department said the economy lost 308,000 jobs in February, the most since November 2001. Economists surveyed by Bloomberg had expected an increase of 10,000 jobs on average. The unemployment rate rose to 5.8 percent from 5.7 percent, in line with forecasts.
Reports about the bin Laden sons later drove some investors to close out "short" positions they had created by selling shares they didn't own. These money managers had bet the stocks would decline, allowing them to repurchase the shares at a lower price.
If bin Laden is captured "over the weekend, we will have a strong rally Monday morning and it will be too late" to reverse those bets, said Jeff Swensen, a trader at John Hancock Advisors, which manages about US$29 billion in Boston.
President George W. Bush yesterday said the US will seek a vote by the UN Security Council authorizing force to disarm Iraq and is prepared to act without the UN's blessing if it loses. Chief weapons inspector Hans Blix told the council that pressure from other counties has helped monitors gauge the progress of Iraq's disarmament.
Five stocks rose for every four that fell on the New York Stock Exchange while nine declined for every eight that advanced on the NASDAQ Stock Market.
Some 1.37 billion shares traded on the NYSE, 4.7 percent above the three-month daily average. Almost 1.43 billion changed hands on the Nasdaq.
Retailers gained after US consumer borrowing unexpectedly rose in January at a 9.2 percent annual rate, the fastest pace since November 2001. Households added to credit-card debt and took out more loans for automobiles, a Federal Reserve report showed.
Wal-Mart, the world's biggest merchant, added 72 cents to US$48.12. Target Corp, the second-largest discount retailer, advanced 69 cents to US$26.75.
Some investors said they've been adding to their share holdings on the expectation that stocks are near the bottom.
"As ugly as it seems, we'll ultimately be successful in the Middle East and the economy will recover in the second half," said Michael Strauss, who helps manage US$30 billion for Commonfund in Wilton, Connecticut. "To nibble at equities here makes sense."
Intel, the world's biggest maker of semiconductors, slid US$0.69 to US$16.01. The company said revenue for the first three months of this year would be as high as US$6.8 billion, below a January forecast for as much as US$7 billion.
Intel cited lower-than-expected sales of flash-memory chips, which retain data when power is turned off and are used in cellphones and digital cameras. The company hasn't seen signs of an economic recovery, Chief Financial Officer Andy Bryant said.
Texas Instruments Inc, the world's No. 1 maker of chips for cell phones, dropped US$0.15 to US$16.30. Applied Materials Inc, the biggest maker of chip equipment, fell US$0.09 to US$11.96.
Gilead Sciences Inc, the maker of HIV medication Viread, climbed US$2.66 to US$26.80. JP Morgan Securities Inc analyst David Molowa boosted his 2003 and 2004 earnings estimates for company because of higher drug sales.
Mandalay Resort Group, owner of the Mandalay Bay and Luxor casinos in Las Vegas, jumped US$2.39 to US$26.10. Analysts at Merrill Lynch & Co and CIBC World Markets boosted earnings estimates because the opening of a US$235 million convention center in January has led to higher room rates.
3Com Corp fell US$0.39 to US$4.11. The world's No. 3 maker of computer-networking equipment said third-quarter sales fell more than it forecast because of slumping demand in North America.
Cisco Systems Inc, the biggest maker of computer-networking equipment, shed US$0.24 to US$13.24.
UTStarcom Inc slumped US$1.28 to US$17.02.
The company, the biggest supplier of cordless phone systems to China, will sell about US$350 million of convertible debt. It will use some of the proceeds to repurchase 8 million shares owned by Softbank Corp at a 5 percent discount to yesterday's closing price.
Altria Group Inc dropped US$1.46 to US$35.82, adding to yesterday's 4.4 percent loss on concern it may lose a lawsuit accusing the company of lying about the health-risks of so-light cigarettes. An Illinois judge said he will deliver a verdict Monday in a class-action suit against the company's Philip Morris USA unit, the Wall Street Journal reported.
S&P 500 futures expiring in March rose 6.80 to 828.60 on the Chicago Mercantile Exchange. March futures on the NASDAQ-100 Index advanced 2.00 to 986.50. The index, a benchmark for NASDAQ's largest companies, gained 2.86, or 0.3 percent, to 986.82.
NASDAQ-100 tracking shares, called Cubes because of their QQQ ticker symbol, rose US$0.05 to US$24.54. The S&P 500 shares known as Spiders gained US$0.57 to US$83.32.
The Russell 2000 Index of smaller stocks advanced 0.34, or 0.1 percent, to 354.18. The Wilshire 5000 Total Market Index, the broadest measure of US shares, added 57.67, or 0.7 percent, to 7,857.32. Based on the Wilshire's change, the total value of US stocks rose US$69.20 billion.
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