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Nasdaq surges for second day in a row

A report on jobless claims and earnings from the likes of E*Trade and Yahoo spur the market to more gains.

Yahoo helped boost Internet stocks Thursday, and technology issues continued to rally, driving up the Nasdaq more than 4 percent.

The Nasdaq composite index gained 75.21 points, or 4.62 percent, to close at 1,701.47; it gained 3.57 percent on Wednesday. The Dow Jones industrial average was up 169.59 points, or 1.84 percent, at 9,410.45.

Yahoo and General Electric both met Wall Street's estimates Thursday, while Redback Networks and E*Trade topped estimates. The news, along with a report that last week's jobless claims declined, helped the Nasdaq and the Dow make gains.

But analysts were wary about how long the upswing would continue.

"The S&P has rallied back close to where it was before the massacre of Sept. 11," UBS Warburg analyst Art Cashin said in his daily note to clients. "Traders grapple with that fact for personal as well as economic reasons. Clearly, the economy is struggling more than it was then."

According to Cashin, a historical search of data on the Dow back to 1893 shows that there was only one time in history--1942--that the index bottomed and moved to a bull market without retesting its lows.

Thursday brought news that jobless claims dropped, but analysts said the report isn't as positive as it first appeared. The Labor Department's weekly report on initial unemployment claims showed that claims fell by 67,000 for the week ended Oct. 6, to a seasonally adjusted 468,000. Though the number showed a decrease, the declines can be attributed to seasonal factors.

"A further deterioration in the labor market is inevitable," Merrill Lynch analyst Bruce Steinberg said in a research note. An upswing in continuing claims showed that the number of workers remaining unemployed rose by 98,000 to a seasonally adjusted 3.48 million for the week ended Sept. 29. That was the highest level since 1991, he noted.

"The labor market has deteriorated sharply as the secondary effects of the terrorist attack have weighed upon the labor market," Steinberg added.

The report also showed that the four-week moving average, considered a more reliable indicator of unemployment, rose to 463,000 from 455,000, the highest level in nearly 10 years.

Earnings news included a report from General Electric that inspired the broader markets. The behemoth that owns aerospace, finance and broadcasting businesses posted a 3 percent rise in third-quarter profits as its power-systems business offset other divisions weakened by the economy. Shares rose $1.03 to $38.94.

Yahoo was up $1.57, or 15 percent, to $12.50 after reporting third-quarter results that met Wall Street expectations. But it also warned of more staff cuts and lowered its fourth-quarter revenue targets. The news boosted Internet stocks; AOL Time Warner gained $1.57, or 5 percent, to $33.91, and CNET's Internet Content index picked up around 5 percent.

E*Trade Group shares rose $1.19, or 18 percent, to $7.85. The company reported that third-quarter profit excluding charges rose 29 percent, and it raised its earnings forecast for the fourth quarter.

Redback Networks shares soared 82 cents, or 50 percent, to $2.46 after the company reported a $3.16 billion loss in its third quarter and said sales plunged 54 percent. The company, which sells equipment to manage broadband services, also said it expects fourth-quarter sales to be flat to slightly up from the $37 million in the third quarter.

Among other actively traded techs, Intel rose $1.45 to $24.51; Oracle rose 68 cents to $14.97; Cisco Systems gained $1.31 to $16.46, and Microsoft rose 81 cents to $16.46.

Staff and Reuters contributed to this report.