NEW YORK — Stocks rose for the first time in three sessions Thursday, although the market's course was choppy as investors weighed upbeat earnings from Adobe Systems Inc. against a brokerage downgrade of IBM. Trading was light and Wall Street subdued on the second anniversary of the Sept. 11 terror attacks.
"It is never going to go away. It is always going to be in the back of our minds," said Brian Pears, head equity trader at Victory Capital Management in Cleveland, adding that the anniversary is more of an emotional issue on Wall Street rather than a factor in trading.
The anniversary was observed at the New York Stock Exchange, the Nasdaq Stock Market and the American Stock Exchange by moments of silence in the morning, marking the times when airplanes struck the two World Trade Center towers and when each tower collapsed.
Investors' concerns about terrorism were renewed Wednesday when Arabic satellite channel Al-Jazeera aired a videotape purportedly of Osama bin Laden.
"Today, we have a little bit of a patriotic rally," said Michael Murphy, head trader at Wachovia Securities in Baltimore.
The Dow Jones industrial average rose 39.30, or 0.4 percent, to 9,459.76, having shed 165.83 in the previous two sessions.
The broader market was also higher. The Nasdaq composite index rose 22.28, or 1.2 percent, to 1,846.09, following a two-day loss of 64.81. On Wednesday, the Nasdaq suffered its worst day in nearly two months, dropping 49.62.
The Standard & Poor's 500 index advanced 5.50, or 0.5 percent, to 1,016.42, having lost 20.72 in the previous two sessions.
Wall Street has been climbing since mid-March, when its major gauges fell to their lows for the year. The advance was fed by the stronger economic growth and corporate profits that investors have sought for more than three years.
Despite the market's weakness this week, analysts remain upbeat and say investors are, too. The analysts have noted that the market was expected to retreat after the major indexes had pulled together a four-week winning streak.
With positive economic news more prevalent than negative data, the market is able to more easily shrug off disappointments.
But given that the economy still has its soft spots, some are concerned that stocks have climbed too high, too fast.
"The market is overextended, but it just doesn't want to come down," Murphy said. "There is still more of a risk to be out of the market than in, but I would like to see it correct a little bit."
Adobe climbed $3.07 to $39.46 after reporting late Wednesday that fiscal third-quarter profits beat Wall Street's estimate by 2 cents a share. On Thursday Merrill Lynch & Co. Inc. raised its rating on the software maker to "buy" from "neutral," while JMP Securities upgraded it to "market outperform" from "market perform."
International Business Machines Corp. advanced 8 cents to $87.92 after losing as much as $1.44 earlier when Smith Barney downgraded it to "underperform" from "in-line," saying the stock is overvalued.
Some on Wall Street, including Wachovia's Murphy, fear that the entire market is becoming overvalued and that the profit taking seen earlier this week could be part of a bigger correction. They note that the indexes standing high above their lows for the year, made on March 11. The Dow is up 25.7 percent from its low, while the Nasdaq is up 45.2 percent and the S&P is up 26.9 percent.
But Pears, the trader in Cleveland, isn't concerned.
"I think the bear market is done. We've rallied enough. It has been in an up trend since March," he said. "It has been a rational response to better economic news."