- The Washington Times - Wednesday, October 9, 2002

NEW YORK (AP) Hopes for an end to a West Coast labor standoff soothed investors yesterday, prompting them to buy stocks and give the market its first advance in five sessions.
Analysts said investors were anxious for a reason to buy stocks after driving down prices for six straight weeks and the previous four sessions in particular. But investors are also wary of committing to the market given uncertainty over earnings, the economy and the possibility of war with Iraq.
Investors' wide-ranging emotions were evident in how stocks fluctuated throughout the session yesterday. The Dow Jones industrials rose as much as 199 points in afternoon trading, having dropped as much as 91 earlier.
"People are looking for a rally after stocks have been knocked down so relentlessly," said Barry Berman, head trader for Robert W. Baird in Milwaukee. But "there really isn't any good news out there right now. "
"The market has been selling off because of a weakening economy and consistent lowering of earnings forecasts. The market is looking for that to turn around, and that just hasn't happened yet," he said.
The Dow closed up 78.65, or 1.1 percent, at 7,501.49. It was the Dow's first progress in five sessions, on the heels of a four-day loss of 515.95.
The market's broader indicators were also higher after four straight days of selling. The Nasdaq Composite Index rose 9.81, or 0.9 percent, to 1,129.21, but was still trading at closing levels last seen in August and September 1996. The Standard & Poor's 500 index advanced 13.27, or 1.7 percent, to 798.55.
Analysts attributed the gains largely to optimism that the 10-day standoff between West Coast longshoremen and shippers would end.
Late yesterday afternoon, President Bush said he directed government lawyers to go to court to seek an injunction to end the labor dispute, which has cost the frail economy as much as $2 billion a day. The longshoremen's union had agreed to go back to work today under a 30-day contract extension.
"Traders are responding positively to the fact that the West Coast port dispute, which has been costly, may in fact be near a resolution," said Alan Ackerman, executive vice president of Fahnestock.
Lower stock prices also contributed to the advance. All three indexes have suffered six straight weeks of declines on worries about Iraq and third-quarter earnings, which companies will be reporting during the next few weeks.
Amid a spate of profit warnings, analysts' third-quarter growth estimates for companies have fallen to 5.4 percent from earlier forecasts of 16.6 percent, according to Thomson First Call.
"That is a much more significant downward revision than we usually see in a quarter," said Ken Perkins, research analyst at Thomson First Call, adding that quarterly estimates are typically lowered by about 3 percent.
The market was also mindful yesterday of developments concerning Iraq. The House and Senate were debating resolutions to authorize Mr. Bush to declare war on Iraq and are expected to vote tomorrow.
Among the winners yesterday on Wall Street, PepsiCo soared $5.32, or nearly 15 percent, to $41.10 on third-quarter earnings that were a penny a share higher than analysts' estimates and on an upbeat outlook for yearly profits. The company said its annual income should be at the high end of expectations.
Sara Lee advanced 47 cents to $19.90 on an upgrade from Lehman Brothers. And General Electric, which reports earnings Friday, rose 40 cents to $23.35.
Declining issues narrowly outnumbered advancers 14 to 13 on the New York Stock Exchange. Volume totaled 2.34 billion shares, ahead of 1.88 billion on Monday.
The Russell 2000 index, which tracks smaller-company stocks, rose 0.48, or 0.1 percent, to 338.77.
Overseas, Japan's Nikkei stock average finished yesterday up 0.2 percent. In Europe, France's CAC-40 lost 1.4 percent, Britain's FTSE 100 fell 1.3 percent, and Germany's DAX index declined 1.7 percent.


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