Stock Market Keeps a Grip on Rally

The stock market showed renewed resilience Wednesday, continuing the rally that began late Tuesday, as investors awaited key economic reports.

The Dow Jones industrial average rose 58.47 points, or 0.7%, to close at 8,427.41.

The market’s broader gauges also finished higher. The Nasdaq composite climbed 26.19 points, or 2%, to 1,326.73. The Standard & Poor’s 500 gained 8.56 points, or 1%, to 890.71.

Winners topped losers by 21 to 11 on the New York Stock Exchange and by 20 to 12 on Nasdaq.

In the bond market Treasury yields were little changed, after diving Tuesday on a report showing consumer confidence at nine-year lows.

The confidence report initially hammered stocks Tuesday, but an afternoon rally pared most of the losses. Buyers remained in control of the market for most of Wednesday, despite more downbeat news from the retail sector.

“I think what investors are liking is the momentum the market had the last 3 1/2 weeks,” said Alfred E. Goldman, chief market strategist at brokerage A.G. Edwards & Sons Inc. “The market bent [Tuesday], but it didn’t break.”

IBM may have helped investor sentiment Wednesday: Chief Executive Sam Palmisano, meeting with IBM customers, said he sees signs that the global economy has “flattened out.” IBM rose $1.93 to $78.67.

Stocks have rebounded from five-year lows reached in mid-October. The Dow has gained 1,141 points, or 15.6%, since Oct. 9, though at Wednesday’s close it was below its recent peak of 8,538 reached Oct. 21.

The government today is expected to give an estimate of economic growth in the third quarter. On Friday the government will report on October employment trends.

Both reports will be closely watched by the Federal Reserve, which meets Wednesday. Many analysts believe the Fed is poised to cut its key short-term interest rate from the current 40-year low of 1.75%, to help the economy.

That sentiment has driven Treasury bond yields lower in recent days, after a sharp rebound in mid-October. On Wednesday yields were relatively stable. The 10-year T-note edged up to 3.96% from 3.94% on Tuesday.

The Treasury said Wednesday it will sell a total of $40 billion in five-year and 10-year notes next week to help cover the federal budget deficit.

Among Wednesday’s highlights:

* Tech stocks rebounded, pushing the Amex networking index up 11.8% and the SOX semiconductor index up 6.6%.

Maxim Integrated Products climbed $3.29 to $32.72. The maker of chips used in cars and MP3 music players said fiscal first-quarter profit rose 19%.

* The Dow got a boost from American Express, up $1.20 to $36.13; and 3M, up $1.58 to $127.33.

* Drug stocks lured buyers. Pharmacia rose $1.08 to $43.50 and Merck added 79 cents to $54.24.

* Wal-Mart led retailers lower after the stock was downgraded by Goldman Sachs to “market performer” and removed from the brokerage’s recommended list. Goldman said the stock’s price relative to earnings leaves little room for additional gains in the near term.

Wal-Mart slid $2.67 to $53.80. Other retailers losing ground included Target, down $1.33 to $30.20, and Kohl’s, down $1.24 to $57.01.

* Darden Restaurants slid $2.91 to $20.01. The owner of chains including Red Lobster said October sales were weak.