Wall Street closed out the week on a positive note Friday, recovering some lost ground since the September 11 terrorist attacks.
Stocks staged a broad-based rally Friday, as investors closed their books on a very trying third-quarter.
The Dow Jones Industrial Average went up 166 points, (almost two percent), to 8,847. The broader Standard & Poor's 500 index added another two percent, (22 points) closing at 1,041. The tech-weighted Nasdaq composite closed up 38 (2.5 percent) higher at 1,499.
The Dow Industrials are up more than seven percent for the week. The Nasdaq is up five percent.
Stocks have still not recovered fully from the steep losses of the week immediately following the September 11 terrorist attacks. Investors remain cautious, mostly due to persistent uncertainty about the U.S. economy.
The latest reading of consumer confidence Friday showed another sharp decline. Wall Street is worried Americans will cut back on spending, giving retailers not much to cheer about as they approach the Christmas holidays - normally their busiest and most profitable season.
Analysts are not sure the past week's stock market rally will hold when investors come back Monday. Market-watcher Ted Weisberg says the shock of September 11 may be starting to wear off, and he hopes investors will be attracted by the sharply lower stock prices. "The tone is better. I'm not sure we're out of the woods (safe) yet. But it seems as we get a little time under our belt, and logic - if there is any logic in this business - is sort of returning to some of the decision-making process, as far as traders and investors are concerned. And perhaps some of the prices of some of these stocks are just too compelling not to take advantage of," Mr. Weisberg said.
The third quarter just ended was the worst quarter for the Dow Industrials in 14 years. It was the second worst quarter ever for the Nasdaq, its worst since last December. Shares of many companies have been downgraded in line with lower profit estimates.
James Raphalian, head of Nasdaq trading for the SG Cowen investment firm, says the markets may be near their bottom. "Now you're finding, with all these downgrades and the expectations being so low, you're finding pretty much of a 'floor' for these things," he said. "And when, not if, but when these things start turning around - as far as earnings, inventories, demand, and whatever - the surprises will be on the upside. And that I think gives me a little more hope for the future."
Looking to the future, the U.S. central bank is expected to continue slashing borrowing costs. The Federal Reserve meets again on Tuesday. Wall Street anticipates another interest rate cut - the ninth this year.