Blue chips rally on Wall Street

Blue chip stocks rose on Wall Street today - giving the Dow Jones industrials their first two-day advance in nearly a month - as investors again searched for bargains after weeks of declines.

But tech stocks were left behind, falling in response to two disappointing economic reports.

Despite the Dow’s advance, which was its second straight triple-digit gain, the session had a cautious tone, reflecting investors’ persistent doubts about the strength of the economy.

And analysts again doubted that the upturn would last because lower prices have not been enough to sustain the market; investors are still demanding solid evidence that business is improving.

The Dow closed up 113.41, or 1.1%, at 10,059.63, recovering from an earlier drop of 115.49. The blue chips, which rallied 126.35 on Tuesday, had not risen for two straight sessions since April 4-5.

The broader market finished mixed. The Nasdaq composite index stumbled 10.70, or 0.6%, to close at 1,677.53, having risen 31.30 in the previous session. The Standard & Poor’s 500 index advanced 9.54, or 0.9%, to 1,086.46.

Lower prices were the only lure for investors today.

The market was disappointed by a report that said manufacturing activity grew at a slower-than expected pace in April.

The Institute for Supply Management said its index of business activity slipped to 53.9, below the reading of 55.0 that analysts were expecting. A level above 50 indicates growth, while a figure below that points to contraction.

Another blow came from the Commerce Department, which reported that construction spending dipped 0.9% in March due to a decline in big government projects including highways and schools.

The reports conflicted with earlier, more upbeat economic data, such as last Friday’s report that the nation’s gross domestic product grew at an annual rate of 5.8% in the first quarter. Analysts said investors were waiting for positive reports to decisively outweigh negative ones before they commit to the stock market.

Dow industrial Procter & Gamble rose dlrs 1.54 to dlrs 91.80 after reporting fiscal third-quarter earnings a penny higher than analysts had anticipated. Kenneth Cole, whose profits also beat expectations by a cent, climbed dlrs 1 to dlrs 28.

Alcoa, a Dow stock, advanced 12 cents to dlrs 34 after Merrill Lynch raised its rating on the aluminium products maker.

Technology was the weak spot, which has been the case during much of the recent sell-off and which is not surprising given that high-techs are expected to be the last companies to emerge from recession.

Sun Microsystems fell dlrs 1.21 to dlrs 6.97 after president and chief operating officer Ed Zander announced his retirement after more than 15 years at the network hardware and software company.

Advancing issues outpaced decliners 3 to 2 on the New York Stock Exchange where volume was moderate.

The Russell 2000 index, the barometer of smaller company stocks, inched up 0.16 to 510.83.