Late rally boosts Wall St

NEW YORK (CNN/Money) - U.S. stocks rallied late Wednesday after floundering all day, on a trading floor rumor that No. 1 software maker and tech leader Microsoft might pre-announce positive results in the near future.

The turnaround came at the end of a tumultuous session in which weakness in biotech and media competed with gains in chips and consumer products names, causing markets to criss-cross the breakeven line for most of the day. But according to Briefing.com, a rumor of a potential upside surprise from Microsoft gave markets the late-day boost.

The Nasdaq composite added 21.94 to 1,519.12, snapping a four-day losing streak. The Dow Jones industrial average gained 100.45 to 9,617.71. The Standard & Poor's 500 index added 6.66 to close at 1,020.26.

"This morning you had a crisis of confidence with ImClone and Omnicom, all the negative perception," Kenneth Polcari, managing director at Polcari/Weicker, told CNNfn's Street Sweep. But the negativity started to fade by the end of the session "and Procter & Gamble became more positive and you had the Microsoft talk."

"With the energy on the floor at the close, I am hoping that it will continue this way tomorrow [Thursday] morning, barring any big negative news out tonight," Polcari added.

In addition to Microsoft (MSFT: up $2.97 to $55.54, Research, Estimates), the other big Dow booster was component Procter & Gamble (PG: up $4.00 to $93.00, Research, Estimates), the maker of consumer products such as Cheer detergent and Crest toothpaste, which rose after saying that earnings per share for the current quarter will top expectations due to strong volume growth.

Asked about the rumor, Microsoft spokesman Jim Desler declined to comment.

Mixed tech picture

A Prudential upgrade of Advanced Micro Devices (AMD: up $0.34 to $9.67, Research, Estimates) seemed to help keep semiconductor names higher, countering some of the other tech losses that had hurt the Nasdaq earlier in the day. The Philadelphia Semiconductor index, or Soxx, rose 3.6 percent. Intel (INTC: up $1.36 to $21.58, Research, Estimates) and Applied Materials (AMAT: up $1.11 to $20.70, Research, Estimates) were among the chip stocks advancing.

But tech weakness remained despite the late-day push. Speaking at a Bear Stearns tech conference Tuesday, the chief financial officer of business software maker Siebel Systems (SEBL: down $2.48 to $15.18, Research, Estimates) said that the second quarter was shaping up to be as tough as the first quarter. Following the news, Goldman Sachs cut its 2002 and 2003 earnings per share estimates on the stock.

Weakness in biotech evaporated by the close. One of the session's most active names was biotech developer ImClone Systems (IMCL: up $0.28 to $7.83, Research, Estimates), whose former CEO Sam Waksal was arrested Wednesday morning on charges of insider trading and perjury.

Spillage in the aisles

Outside of tech, a number of supermarket chains and other retailers were active after supermarket operator Safeway (SWY: down $4.42 to $31.76, Research, Estimates) warned that second-quarter results won't meet current expectations.

A few Dow component names failed to join the broader rally. Shares of Walt Disney (DIS: down $0.43 to $21.15, Research, Estimates) fell in a media sector blowout after a published report revived concerns about potential accounting irregularities at No. 3 advertising firm Omnicom Group (OMC: down $15.28 to $62.28, Research, Estimates).

"The overall sector is being destroyed in the wake of Omnicom," said Christopher Dixon, a media analyst at UBS Warburg who covers Disney.

American Express (AXP: down $1.59 to $37.14, Research, Estimates) was the Dow's other big problem. "There's nothing specific, but the bank index is down, financials are down and AXP is being dragged down with it," said Michael Hughes, a financial sector analyst at Merrill Lynch, who covers the stock.

Treasurys were higher, pushing the 10-year note yield down to 4.95 percent.

"We're taking our cues from the stock market. Bonds are at a three-month high today [Wednesday]," Andrew Wallace, managing director at R.J. O'Brien & Associates, told CNNfn's Halftime Report.

In global trade, European markets closed near eight-month lows, while most Asian markets closed lower. The dollar was a little stronger versus the yen and the euro.

Light crude oil futures rose 52 cents to $24.64 a barrel in New York. Gold rose 60 cents to $321.10 an ounce.

Market breadth remained negative, despite the stock turnaround on heavy volume. On the New York Stock Exchange, decliners edged advancers as 1.72 billion shares changed hands. On the Nasdaq, losers beat winners 5-to-4 as 2.00 billion shares traded.