- The Washington Times - Wednesday, March 3, 2004

NEW YORK (AP) — A bullish economic assessment from the Federal Reserve gave most stocks a modest lift yesterday, but the buying lacked conviction as Wall Street looked ahead to a key jobs report due later in the week.

The Fed’s report that manufacturing activity and consumer spending rose over the past two months while jobs growth remained sluggish helped temper concerns about a coming interest-rate increase. But analysts said the survey of the nation’s business climate did not hold enough upside surprise to move the markets significantly higher.

“There was nothing in the report to upset the apple cart one way or the other,” said Simon Melluish, head of U.S. equities at Gartmore Funds. “We’re treading water a bit, waiting until we get new bits of news.”

The Dow Jones Industrial Average finished up 1.63, or 0.02 percent, at 10,593.11, after spending most of the session in negative territory.

The broader gauges were narrowly mixed. The Nasdaq Composite Index declined 6.29, or 0.3 percent, to close at 2,033.36, but was well above its intraday lows. The Standard & Poor’s 500 Index added 1.93, or 0.2 percent, to 1,151.03.

Generally good economic news and strong fourth-quarter earnings have raised optimism about the recovery, but a pattern of uneven trading has developed as investors grow increasingly nervous about when rates will rise. Stocks sank Tuesday when Fed Chairman Alan Greenspan reiterated his view that interest rates must go up eventually.

The Fed has said it would be patient with its policy, but repeated indications that a rate increase lies ahead have helped elevate the dollar from its doldrums this week. Its surge against foreign currencies prompted worry that the steady demand for U.S. Treasuries from Asian central banks may soon be on the wane, and sent bond prices lower and yields higher.

The Fed survey, dubbed the Beige Book for the color of its cover, only whetted Wall Street’s appetite for the government’s February employment report, due tomorrow. An upbeat reading could help the market gain momentum. The importance of the employment picture was underscored Monday, when stocks moved sharply higher after the Institute for Supply Management reported better-than-expected jobs growth in the manufacturing sector.

“The rally was based on the expectation of a stronger economy and now we’ve got to see it,” said Ken McCarthy, chief economist at VFinance Investments. “To get to the next level to rise, we have to actually see the growth in employment.”

On the Dow, Walt Disney Co. declined 11 cents to $26.65 as embattled Chief Executive Officer Michael Eisner presided over the company’s annual meeting in Philadelphia. A recent hostile takeover bid from Comcast Corp. has fed disappointment in the company’s performance, and anger toward Mr. Eisner. Comcast closed up 47 cents at $30.40.

Wal-Mart Stores Inc. gained 81 cents to $60.36 after announcing plans to raise its quarterly dividend to 13 cents a share, up from 9 cents. The retailer, which has increased its dividend annually since 1974, said this year’s increase will return more than $2.2 billion to shareholders.

Toys “R” Us Inc. added $1.09 to close at $16.39 after reporting lower fourth-quarter earnings and announcing plans to sell its shuttered Kids “R” Us stores to Home Depot.

AutoZone Inc., the nation’s largest auto-parts chain, sank $4.76 to $83.64 after posting a jump in quarterly profits, but flat sales.

Advancing issues slightly outnumbered decliners on the New York Stock Exchange. Volume was 1.32 billion shares, compared with 1.48 billion shares traded Tuesday.

The Russell 2000 Index, which tracks smaller-company stocks, was essentially flat, closing up 0.26 at 591.32.

Overseas, Japan’s Nikkei stock average finished 0.1 percent lower yesterday. In Europe, France’s CAC-40 shed 0.7 percent, Britain’s FTSE 100 lost 0.3 percent and Germany’s DAX Index was down 0.7 percent.

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