U.S. stocks rallied Wednesday for their first gains since the U.S.-led military attacks in Afghanistan began Sunday. The Dow Jones Industrial Average climbed 188 points, over two percent, to 9,240. The broader Standard and Poor's 500 index also closed over two percent higher, up 24 points, while the tech-weighted Nasdaq composite went up almost three and two-thirds percent.
The markets apparently shrugged off much of the bad news on the corporate earnings front, seizing upon those companies that have met expectations. Among the bright notes, soft drink-maker Pepsi and drug-maker Abbott Laboratories both reported profits on target.
On the down side, wireless company Motorola posted a third quarter loss. It said the fourth quarter also looks bleak and announced additional job cuts. But even Motorola shares held their ground.
Motorcycle company Harley-Davidson raced ahead of Wall Street estimates, reporting profits up about 35 percent. Sales increased almost 20 percent. Analysts say those bikes are a "dream purchase" even in times of economic uncertainty. Harley-Davidson's earnings results would seem to confirm that view. The company says it plans to increase production.
With Wednesday's gains, the markets have recovered most of the ground they lost in the wake of the terrorist attacks on New York and Washington. Since September 11, the Dow Industrials are only 3.8 percent lower. The Nasdaq is down about four percent.
Tom Galvin, an investment strategist with Credit Suisse First Boston, is skeptical about the market's recent gains. He says investor activity is tepid at best. He believes the key to real upward momentum lies with the U.S. consumer, who drives the U.S. economy.
"I think we're going to continue to track whether or not consumers in America have been able to adjust their lives, to try to return to some level of normalcy, because if they have, then the profitability for corporate America can actually return somewhat faster than was expected just a month ago," he said.
In other news, more trouble may be looming for Microsoft. It appears European anti-trust regulators may seek a massive fine from the leading software maker. This report comes one day after the U.S. Supreme Court rejected Microsoft's appeal of an anti-trust ruling at home.