- The Washington Times - Friday, November 22, 2002

A drop in jobless claims to a four-month low provided evidence yesterday that the autumn economic lull may be ending, helping to spark a 222-point gain in the Dow Jones Industrial Average.
The 25,000 drop to 376,000 in first-time claims for unemployment benefits last week brought the four-week average under 400,000 for the first time since late summer, when signs of a slowdown started to emerge, according to the Labor Department.
Stocks rallied strongly, adding to previous gains that drove the Dow up more than 20 percent to 8,845 from four-year lows set last month. The Nasdaq Composite Index jumped 48 points to 1,468 and climbed more than 30 percent from its October lows.
Some Wall Street gurus say that, with a revival in the economy, the bear market may finally be ending.
"Things are beginning to get better in the economy," prompting investors to take money out of bonds and other bear market investments and put it back into stocks, said Jay Mueller, portfolio manager at Strong Capital Management.
"People don't expect the economy to fall off a cliff anymore," he said. "Confidence in the recovery is improving."
"The claims numbers are a big deal because a large piece of the fear that the market will drop again is that the consumer may falter if job conditions deteriorate," said James Paulsen, portfolio manager at Wells Capital Management.
Yesterday's news on jobless claims was accompanied by signs of a pickup in manufacturing in Philadelphia and a leading economic indicators report from the Conference Board that suggested growth will flatten in the months ahead.
While the board's report suggests the economy faces an uphill battle next year, economists noted that the stall in the leading indicators primarily reflected the fall of the stock market and consumer confidence early last month, as well as an uptick in jobless claims.
Since all those trends reversed in recent weeks, the leading indicators should be up this month, they said.
"The latest batch of weekly indicators suggests the stock market likely bottomed in October, and points to continued economic growth next year, along with higher profits and stock prices," said Ed Yardeni, chief investment strategist with Prudential Securities.
"The bull-market pieces are falling into place," said economist Lawrence Kudlow of Kudlow & Co., noting that the Federal Reserve's dramatic half-point cut in interest rates earlier this month helped stoke the stock rally, along with the Republican takeover of Congress.
"Bears beware. Pessimists go hide," he said.
While yesterday's news on jobless claims was good for the more than 8 million Americans looking for work, about 800,000 jobless will face a cutoff of weekly checks three days after Christmas with the expiration of a law providing 13 weeks of extended unemployment benefits.
Congress appears ready to adjourn for the year without passing an extension. The House and Senate were unable to reconcile differences over how long the program should continue. The House passed a five-week extension, at a cost of $900 million, while the Senate passed a $4 billion, three-month extension.
The cutoff will subtract more than $200 million from the economy in the last week of the year, according to the National Employment Law Project.
Senate Majority Leader Tom Daschle, South Dakota Democrat, said President Bush should persuade the House to pass the Senate bill when it meets for a brief session today. He called the cutoff at Christmas "a story right out of Charles Dickens."

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