- The Washington Times - Saturday, November 3, 2001

NEW YORK (AP) Investors pushed stocks mostly higher yesterday for a second straight day, betting that the economy has reached a low point and that business will indeed improve next year.

In focusing on the future, the market set aside its disappointment over a surge in unemployment.

Analysts said investors largely shrugged off the jobless report because they believe the economy will turn around in 2002 as a result of this year's nine interest-rate cuts and the possibility of a tax-cut package being pushed by President Bush. The market, which also looked past Thursday's reports of big drops in consumer spending and manufacturing activity, is increasingly hopeful about the government's retaliation for the September 11 terrorist attacks.

"There's a whole bullish case revolving around the notion that we will be successful in degrading the terror threat, and our economy can expand again, and that 2002 will be better than 2001," said Joseph V. Battipaglia, chief investment strategist at Gruntal & Co.

The Dow Jones Industrial Average closed up 59.64, or 0.6 percent, at 9,323.54, recovering from an earlier 54-point loss to add to its 188-point jump from Thursday.

The broader market finished narrowly mixed. The Nasdaq Composite Index slipped 0.57, or 0.03 percent, to 1,745.73, while the Standard & Poor's 500 index gained 3.10, or 0.3 percent, to 1,087.20.

But the market ended the week slightly lower, which analysts attributed to institutional selling as mutual fund managers adjusted portfolios before the end of the industry's fiscal year on Oct. 31.

For the week, the Dow fell 221.63, or 2.3 percent; the Nasdaq, down 23.23, or 1.3 percent; and the S&P, down 17.41, or 1.6 percent.

News early yesterday that the nation's unemployment rate soared to 5.4 percent in October, a 0.5 percent rise over September, pushed the entire market lower. Investors were disturbed to hear that it was the biggest one-month jump in joblessness since May 1980 as a massive 415,000 jobs were eliminated. It marked the highest unemployment rate since December 1996.

The market rewarded companies that announced layoffs, believing such steps will help boost profits. Boeing, which announced it will speed up layoffs of thousands of workers, rose $1.16 to $34.35.

After a dismal third quarter, analysts expect companies to have an easier time posting earnings growth in the fourth quarter and next year.

Another catalyst for the two-day upturn was news that Microsoft and the Justice Department had reached a tentative agreement in the antitrust case against the software maker.

After soaring $3.69 on Thursday, Microsoft slipped 44 cents to $61.40 yesterday. Overall, the tech sector was mixed yesterday.

Blue-chip gains came in a variety of sectors and industries, as has been the case with the market's recent rallies. Merck rose 83 cents to $65.03, Wal-Mart gained 73 cents to $52.97, and Honeywell advanced 70 cents to $31.15.

The Russell 2000 index, the barometer of smaller company stocks, fell 1.81, or 0.4 percent, to 433.07. For the week, the Russell lost 5.58 point, or 1.3 percent.

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