NEW YORK -- Stocks surged in heavy mid-afternoon trading on Monday, as investors turned buyers on bullish comments from President Bush and a closely followed Wall Street strategist.
Blue-chips jumped almost 4 percent, paring last week's slump in the Dow Jones industrial average by about one quarter, and technology stocks showed strength for the first session in six. Stocks tumbled after the Sept. 11 terror attack on New York's financial core.
President Bush said U.S. economic travails were "short term" and Goldman Sachs & Co. strategist Abby Joseph Cohen raised her stock allocation, citing lower prices and the benefits of an easier money policy.
In addition, investors said stocks were primed for a bounce after last week's wrenching slump of about 15 percent. Still, they warned the economic and profit outlook remains cloudy.
"After days of extreme market pressure, it's inevitable that the market would bounce, but whether it's sustainable for more than day or two I don't know," said Andrew Abrams, a fund manager with CWH Associates Inc. "Visibility is getting very cloudy again, and when visibility is cloudy, markets tend to sell off."
Abrams said he is concerned about the outlook for fourth-quarter earnings.
The Dow surged 325.7 points, or 3.95 percent, to 8,561.51, after crumbling 14.26 percent last week. General Electric Co., up $3.90 at $35.20, helped buoy the Dow after saying the company said on Friday it was on track to deliver double-digit earnings growth.
The Nasdaq Composite Index jumped 70.17 points, or 4.93 percent, to 1,493.36, after plummeting 16 percent last week. Web gear giant Cisco Systems Inc. gained 70 cents to $12.78. Chip leader Intel Corp. added $1.94 at $21.24. Both boosted the tech-packed index.
The broader Standard & Poor's 500 Index was up 35.99 points, or 3.73 percent, at 1,001.79, bouncing back from last week's 11.6 percent slide. All three stock gauges are trading near three-year lows.
Throughout last week, the first full week of trading since the attack on the twin towers of the World Trade Center in New York's financial district, frightened investors dumped stocks amid worries about the cost of possible U.S. military retaliation, massive layoff announcements, and signs the economy may slide into recession. The blue-chip Dow skidded 1,370 points, its biggest weekly loss since the Depression in the 1930s.
Oil stocks were among the few decliners as oil prices sank 15 percent on growing confidence the U.S.-led war on terrorism will not crimp Middle Eastern oil exports to the West.
The oil service index fell 3.59 percent. A weakening global economy has stunted demand and sent oil prices hurtling to their lowest level in almost two years.
The prospects for global oil demand growth next year are being steadily revised lower as economists calculate the after-effects of the suicide air attacks on the United States.
The Organization of Petroleum Exporting Countries was left powerless to respond to the collapse of oil markets that could signal the end of a price boom engineered by the cartel over the past two years.
"As we move away from big political move and if our troops are not occupying countries, we'll probably go back to the scenario where companies are using less oil," said Abrams.
Among the losers, Apache Corp. sank $3.06 to $39.25.
Bush bemoaned the thousands of layoffs triggered by the Sept. 11 attacks but promised a recovery in America's economy. "I want to assure the American people that the fundamentals for growth are very strong," Bush told reporters during a Rose Garden appearance.
Goldman Sach's chief investment strategist Abby Joseph Cohen raised her recommended stocks allocation to 75 percent from 70 percent and cut her bond weighting to 22 percent from 27 percent. Stocks are more attractive than before in part because they are undervalued, Cohen told clients.
Optical components maker JDS Uniphase Corp. rallied 86 cents to $6.15. The optical components maker said although an industry downturn has yet to reverse, signs of stabilization are emerging.
