- The Washington Times - Saturday, July 27, 2002

NEW YORK (AP) Wall Street finished a tumultuous week on an upbeat note yesterday, with stocks posting a solid advance and raising hopes that after more than two months of selling, the worst of the market's decline might be over.

The gain helped the Dow Jones Industrial Average to achieve its biggest weekly advance in 10 weeks.

"We are starting to get investor interest back into the marketplace." said Arthur Hogan, chief market analyst at Jefferies & Co.

The week, which saw the Dow make its second-largest one-day point gain, also marked the first time since July 1-5 that the Dow, the Nasdaq Composite Index and the Standard & Poor's 500 Index all had two winning sessions.

The Dow closed up 78.08, or nearly 1 percent, at 8,264.39. The blue chips ended the week up 3.1 percent, their best showing since they rose 4.2 percent the week of May 17.

They also moved back above their Sept. 21 level of 8,235.81, the Dow's closing low after the terrorist attacks. The average first closed below that level on July 18.

The market's other major indexes also advanced yesterday. The Nasdaq rose 22.04, or 1.8 percent, to 1,262.12. The S&P 500 advanced 14.16, or 1.7 percent, 852.84.

But the week was mixed for the broad market with the Nasdaq falling 4.3 percent and the S&P 500 rising 0.6 percent. The three indexes have not all had a weekly gain since May 17.

The Nasdaq and S&P 500 remain well below their Sept. 21 lows.

Prices fluctuated during the session, as they had all week long. But a significant change was the fact that the major indexes turned higher in late afternoon the opposite of their pattern over the past few weeks, when they gave up fragile gains and closed lower.

Analysts believe that investors both individual and institutional are beginning to feel more at ease after driving prices to five-year lows over the past 10 weeks. But investors are still tentative because the market's steep declines are still fresh.

"There is a belief that there is a near-term bottom in place and that has bolstered some confidence," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.

Mutual fund managers, Mr. Kleintop said, "feel more comfortable with their cash flows, that investors aren't going to pull money out, and the valuations make them feel excited about doing some buying."

Analysts said the lower prices are going to be the biggest factor in getting investors back into the market. But, at the same time, the buying won't be long-lasting unless investors' confidence in corporate bookkeeping is restored.

Substantial progress toward rebuilding sentiment was made Wednesday when executives from Adelphia Communications were arrested on suspicion of looting the company. And, House and Senate negotiators on Wednesday agreed on legislation that would create tougher penalties for corporate fraud. The Dow soared 488 points, its second-biggest one-day point gain.

Largely satisfactory second-quarter earnings also lent support to the market.

"All of that is part of the process that instills confidence back in the system," Mr. Hogan said. "It feels like we are at a juncture where people want to get back into the game."

Among yesterday's winners, Dow industrial Microsoft rose $2.52 to $45.35 on news it would increase by 22 percent its sales force dedicated to its SQL Servers, according to Dow Jones Newswires.

Qualcomm advanced 34 cents to $25.99 on profits that were two cents a share higher than expectations.

Chip equipment makers advanced after Goldman Sachs upgraded several companies, noting that "while fundamentals are not likely to improve in the near-term, we believe that funds flow and seasonality may drive a meaningful move in the stocks."

Novellus rose 30 cents to $24.60 and Applied Material gained 9 cents to $14.32.

Pfizer rose $1.39 to $29.46 after Lehman Brothers said in a research note it was the strongest drug stock.

Analysts expect investors in the coming weeks to do more buying, enticed by lower stock prices after more than two month of heavy selling brought issues to values not seen since 1997.

Advancing issues outnumbered decliners more than 3 to 2 on the New York Stock Exchange. Volume was light at 1.79 billion shares, compared with 2.40 billion on Thursday.

The Russell 2000 index, the barometer of smaller company stocks, rose 4.14, or 1.1 percent, to 382.25. The Russell ended the week down 1 percent.

Overseas, Japan's Nikkei stock average finished yesterday down 3.4 percent. In Europe, Britain's FTSE 100 rose 1.3 percent, France's CAC-40 gained 0.7 percent and Germany's DAX index advanced 1.7 percent.

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