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Originally published November 7, 2007 at 12:00 AM | Page modified November 7, 2007 at 2:02 AM

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Markets

Bargain hunters boost stocks

Wall Street bounded higher Tuesday as investors still mindful of widening credit problems nonetheless went in search of bargain stocks. The Dow Jones industrial average...

The Associated Press

NEW YORK — Wall Street bounded higher Tuesday as investors still mindful of widening credit problems nonetheless went in search of bargain stocks.

The Dow Jones industrial average rose 117.54 to close at 13,660.94. The size of the gain masked the nervousness in the market; stocks were down earlier in the session.

But Microsoft, one of the 30 Dow stocks, fell 32 cents to close at $36.41 a share. Boeing, also a Dow stock, slipped 27 cents to $97.70.

Broader stock indicators also turned higher. The Standard & Poor's 500 index rose 18.10 to 1,520.27, and the Nasdaq composite index rose 30.00 to 2,825.18.

Though investors remain concerned by the big debt problems at banks, companies outside of the banking, lending and housing industries have been posting strong financial results. Tenet Healthcare, Nortel Networks and Archer Daniels Midland impressed Wall Street with their quarterly earnings Tuesday.

"There was an absence of bad news," said Jim Herrick, manager of equity trading at Baird & Co. "But there's room for another shoe to drop. I don't think we're out of the woods yet. It's a classic relief rally."

Government bonds dipped as money flowed back into stocks. The yield on the 10-year Treasury note, which moves opposite the price, rose to 4.37 percent from 4.34 percent late Monday.

The Dow is about 500 points, about 3.5 percent, below the all-time high close of 14,164.53 it reached Oct. 9. Many companies, particularly in the technology and industrial sectors, have been consistently posting strong quarterly results and appear undervalued. But third-quarter weakness in the financial sector — the biggest in the S&P 500 — has dragged down overall U.S. earnings growth.

"We've had a pretty good run, as far as a return for the year for the broad market indices," said Janna Sampson, director of portfolio management at Oakbrook Investments, pointing out that the S&P 500 index is up more than 8 percent for the year. "There may not be, given the level of earnings growth, a lot more for this quarter."

Copyright © 2007 The Seattle Times Company

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