- The Washington Times - Tuesday, August 20, 2002

NEW YORK (AP) Investors held on to their optimism yesterday, sending stocks sharply higher in response to stronger retail earnings and a smaller-than-expected drop in a key economic gauge. The Dow Jones industrials surged more than 210 points to close just below 9,000.
Analysts said the absence of any significant negative news, such as accounting restatements, added to the good mood on Wall Street, which has seen two straight weeks of gains among the three major indexes. Light trading also gave prices a boost.
"The path of least resistance is always higher," said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore.
The Dow closed up 212.73, or 2.4 percent, at 8,990.79, following a 0.4 percent advance last week. The Dow has recovered about 1,500 points since it hit an intraday low of 7,489.53 on July 24.
The last time the Dow closed above 9,000 was nearly six weeks ago, on July 9.
The broader market also closed higher yesterday. The Nasdaq Composite Index was up 33.53, or 2.5 percent, closing at 1,394.54, having surged 4.2 percent last week.
The Standard & Poor's 500 index rose 21.93, or 2.4 percent, closing at 950.70, after a weekly gain of 2.2 percent. The Russell 2000 index of smaller-company stocks rose 5.32, or 1.3 percent, to 401.29.
The Conference Board reported that its Index of Leading Economic Indicators, an important gauge of U.S. economic activity, fell 0.4 percent to 111.7 in July, slightly beating analysts' expectation of a decline of 0.5 percent. July's figure represents the second straight monthly decline in the index, after a revised 0.2 percent drop in June.
The better-than-expected report prompted investors to continue their buying from last week. The three major indexes rose for the second straight week last week, a feat not seen in five months.
"People are feeling better about the market in general," said Brian G. Belski, fundamental market strategist at US Bancorp Piper Jaffray. "Whether that has staying power remains in question, given that one, the markets have been up four weeks in a row; and two, it's heavy vacation time on Wall Street."
Strong profits lifted several issues, including home-improvement retailer Lowe's, which rose $4.21 to $41 after posting a 42 percent increase in second-quarter profits and raising forecasts for its third quarter.
Vivendi rose $2.17 to $11.93, boosted by company Chairman Jean-Rene Fourtou's letter to shareholders announcing $1.97 billion in financing from creditor banks.
Pulling down pharmaceutical shares was AstraZeneca's news that a key trial of its cancer drug Iressa had disappointing results. The company's shares fell $6.02 to $30.98. Also hurt were two companies with similar drugs in their pipelines, OSI Pharmaceuticals, which dropped $18.74 to $14.05, and ImClone Systems, which fell 98 cents to $8.26.
Advancing issues led decliners more than 2 to 1 on the New York Stock Exchange. Consolidated volume was light at 1.61 billion shares, above 1.56 billion Friday.

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