Rumor of Bin Laden Capture Sparks Rally

Stocks ended mixed Wednesday as a rumor that Osama bin Laden had been captured helped drive major indexes higher in the final 30 minutes of trading.

The U.S. military denied the rumor, but not in time to halt a rally that left the Dow Jones industrial average up 52.17 points, or 0.5%, at 10,157.88, and the Nasdaq composite up 9.27 points, or 0.6%, at 1,673.45.

The market traded modestly lower for most of the session, with the Dow off as much as 42 points and Nasdaq down as much as 20 points. Trading volume was light.

In other action, gold continued to march higher, with near-term gold futures gaining $2.20 to $318 an ounce in New York.

The dollar’s sell-off was halted against the yen, but the buck sank further against the euro, the Canadian dollar and other currencies.

Stocks opened lower, continuing the slide that took the Dow down a total of 248 points Monday and Tuesday. Prices had rebounded last week, but new worries about potential terrorist attacks helped trigger fresh selling this week.

Though major indexes rose Wednesday, losers topped winners by 19 to 15 on Nasdaq. Winners had a modest edge on the New York Stock Exchange.

Many analysts aren’t holding much hope that the market can make progress this week, and say selling could continue to dominate as investors play it safe ahead of the long Memorial Day weekend. Some of the recent terror warnings are pegged to the weekend.

“Emotions are running high. It’s a reminder of the disruption that a terrorist strike can cause not only to the public, in loss of life, but its effects on the economy,” said Barry Hyman, strategist at Ehrenkrantz King Nussbaum.

Some nervous investors continued to seek a safe haven in gold, driving prices to their highest level since October 1999.

“There has definitely been more interest in gold from investors than there has been in a long time,” Sholom Sanik, a broker at money manager Friedberg Mercantile Group in Toronto, told Bloomberg News. “There is a portfolio shift.”

Some global investors are selling dollar-denominated assets for gold, analysts say, reflecting fears about a possible new attack on U.S. soil. Those sales are driving the dollar lower and other currencies higher.

The euro’s value, for example, rose to 92.6 cents Wednesday from 92 cents Tuesday, and now is the highest since September.

But any foreign selling of Treasury securities appears to be offset by demand from domestic investors: The 10-year T-note yield fell Wednesday to 5.11%, down from 5.15% Tuesday and the lowest since May 7.

Among Wednesday’s highlights:

* Software stocks slumped after brokerage Goldman Sachs cut its outlook for two dozen companies in the sector, saying corporate spending won’t pick up this year. SAP fell $1.83 to $26.06, Rational Software lost 90 cents to $11.93 and Siebel Systems was off 98 cents to close at $20.

* In the telecom sector, Qualcomm fell $1.25 to $31.37. The wireless technology firm gave a conservative financial outlook at its annual meeting with investors, some participants said.

* Many gold mining stocks rallied again. Glamis Gold jumped 54 cents to $9.68 and Placer Dome added 31 cents to $13.88.

* Ford Motor advanced 61 cents to $18.19 after Banc of America Securities raised its rating to “buy” from “market perform,” citing hopes for deeper cost-cutting.

* Johnson & Johnson surged $1.36 to $62 after releasing data showing that its new drug-coated coronary stent is effective.

* Gap tumbled $2.45, or 15%, to $13.55 as uncertainty swirled around the apparel retailer a day after Chief Executive Millard “Mickey” Drexler’s surprise announcement that he will retire. Merrill Lynch cut its investment rating on Gap to “neutral” from “strong buy,” saying that Drexler and his leadership were critical to the company’s recovery plan.

* Tenet Healthcare fell 84 cents to $70.56, but after trading ended the hospital firm said it will split its stock 3 for 2.

* Several new stock issues were priced Wednesday. They included online DVD renter Netflix, which was priced at $15 a share and will begin trading today under the symbol NFLX; and generic drug maker Eon Labs, which was priced at $15 and will begin trading today under the symbol ELAB.

Market Roundup, C6-7