- The Washington Times - Saturday, October 12, 2002

NEW YORK (AP) Stocks rose sharply yesterday for a second straight session, lifted by positive earnings news from General Electric and a brokerage upgrade of IBM. The Dow Jones Industrial Average jumped 316 points to post its first winning week since August.

The Dow Jones Industrial Average climbed 316 points, or 4.2 percent, to close at 7,850. Blue chips saw their first back-to-back daily gains in two weeks after rising 248 points Thursday.

The broader market also finished higher. The Nasdaq Composite Index rose 47, or 4.1 percent, to 1,210. The Standard & Poor's 500 index gained 31, or 3.9 percent, to 835.

All three indexes recorded their first weekly gains in seven weeks with the Dow rising 4.3 percent, the Nasdaq climbing 6.2 percent, and the S&P advancing 4.3 percent.

General Electric reported a 25 percent increase in third-quarter earnings, matching analysts' expectations. The conglomerate also said it would meet its profit forecast for the year despite tough economic conditions. Shares rose $1.61 to $24.21.

IBM climbed $6.34 to $63.92 after Lehman Brothers upgraded its stock to overweight, the equivalent of a buy. The news boosted other computer stocks, including Intel, which rose $1.04 to $15.22 and Microsoft, which gained $2.49 to $48.87.

Investors, meanwhile, seemed to appreciate a pair of economic reports that fell in line with analysts' expectations and shook off another showing a sharp decline in consumer confidence.

The Commerce Department reported yesterday that consumers cut back spending in September, pushing the nation's retail sales down by 1.2 percent, the largest drop since November. Some analysts forecast a drop of 0.6 percent, while others projected the larger decline of around 1.2 percent.

Separately, the Labor Department said wholesale prices rose by 0.1 percent in September, after being flat in August. The report suggested that inflation is low and isn't a threat to the economy.

And the University of Michigan reported that consumer sentiment in October dropped unexpectedly to 80.4 from 86.1 in September, the lowest since the fall of 1993. Economists had expected the index to hold about steady.

"It's certainly not great numbers, but if investors are starting to view numbers like that as positives, then you know a lot of pessimism has been built into the market," creating opportunities for some stock rallies, said John C. Forelli, portfolio manager for Independence Investment LLC in Boston.

"We've been in such a poor market lately that a little bit of a bounce always feels good, but we don't know if there will be follow-through."

Some analysts were cautiously optimistic that the market could continue to sustain its rally, although they acknowledge the possibility of more steep declines because of growing investor concern about the strength of the economic recovery and prospects of a war with Iraq.

After hitting a peak Aug. 22, blue-chip stocks have lost about 1,200 points.

Advancing issues outnumbered decliners 11-to-2 on the New York Stock Exchange. Consolidated volume was heavy at 2.22 billion shares, but lower than the 2.46 billion traded Thursday.

The Russell 2000 index, a barometer of smaller company stocks, rose 8.75, or 2.6 percent, to 344.93.

Overseas, Japan's Nikkei stock average finished yesterday higher 1.1 percent. France's CAC-40 rose 5.2 percent, Britain's FTSE 100 climbed 4.7 percent, and Germany's DAX index was up 7.2 percent.

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