‘Reflex Rally’ Boosts Stocks After 2-Day Rout

Stocks regained their footing Thursday after two days of sharp losses, as technology issues snapped back and blue-chip shares gained on hopes for a breakthrough in federal budget talks.

The Dow Jones industrial average ended up 32.16 at 5,065.10, retracing only a fraction of the 164-point loss it sustained on Wednesday and Tuesday.

But analysts and traders said they did not trust the recovery.

“Things were pounded down so far,” said Richard McCabe, chief market analyst at Merrill Lynch & Co., “that in the absence of any further bad news, the thing just got into this reflex rally, or springback.

“I don’t think it’s the start of any durable new advance or a resumption of the year-end rally,” McCabe added.

Advancing issues led decliners by more than 3 to 2 on the New York Stock Exchange. Trading was heavy at a revised 407.62 million shares as of 4 p.m., but below Wednesday’s frenetic pace of 496.79 million, the fifth-heaviest day ever on the New York Stock Exchange.

Some of the stocks that moved substantially Thursday:

NYSE

Motorola rose 1/4 to 50-1/8.

The stock continued to recover from Tuesday’s big drop tied to disappointing earnings, primarily in its cellular telephone business.

J.P. Morgan & Co. rose 1-7/8 to 76-3/8.

The New York-based banking company reported fourth-quarter profit of $1.80 a share, up from 96 cents a year ago.

NASDAQ

Apple rose 3/4 to 35.

The stock ended higher, erasing earlier losses, after the personal-computer maker said it will slash prices and report a loss of $68 million, or 55 cents per share, before restructuring charges, in the October-December quarter. Analysts expect more than 1,000 layoffs.

Xilinx rose 3-9/16 to 31-13/16.

Third-quarter net income rose to 41 cents per share from 21 cents a year ago. Cowen & Co. upgraded the stock to trading buy from neutral. The San Jose, Calif., company makes programmable semiconductors.

AMEX

Royal Oak Mines fell 3/16 to 4-7/16.

Echo Bay fell 3/8 to 11-7/8.

Hemlo Gold fell 1/8 to 11-1/2.

Pegasus Gold fell 1-1/8 to 14-1/2.

Bema Gold finished unchanged at 2-5/16.

The price of gold was correcting after breaching $400 an ounce on Wednesday. At late afternoon in New York, spot gold was down 90 cents per troy ounce at $398.80.