- The Washington Times - Tuesday, August 26, 2003

NEW YORK (AP) — Stocks resumed their upward path late yesterday, climbing back from earlier losses to close higher for the first time in three days. Analysts attributed the upturn to technical factors rather than positive reports on durable-goods orders and consumer confidence.

Stocks were also pressured for most of the session by cautionary words from Intel about the state of the technology business.

The fluctuations in stock prices once again came in very light trading as many traders and their clients were away on late-summer vacations.

“A lot of this is technical. … With this light of volume, it is easy to have these intraday trend levels change. It takes less buying or selling to change the direction of the market,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati.

After losing as much as 84.56 earlier, the Dow Jones Industrial Average closed up 22.81, or 0.2 percent, at 9,340.45. The gain followed a two-day loss of 106.04.

The broader market also turned higher in the late afternoon. The Nasdaq Composite Index rose 6.34, or 0.4 percent, to 1,770.65. The Standard & Poor’s 500 index advanced 3.02, or 0.3 percent, to 996.73.

Analysts said the market has already priced in expectations of good economic news. They attributed the market’s volatility to thin trading and the latent weariness of investors who remain uncertain about the second half of the year.

The run-up in stock prices in recent months “fully reflects the improvements in the economy that we’re expecting right now,” said John Caldwell, chief investment strategist for McDonald Financial Group, part of Cleveland-based KeyCorp.

“The tough part of this market is that valuations are relatively high and we’re talking about a week that has a fairly subdued tone to it, in terms of the number of participants on Wall Street,” he said.

The market looked past a report issued in the morning showing that orders to manufacturers for big-ticket products rose for the second straight month in July. The report from the Commerce Department, which was in line with expectations, offered fresh evidence of an economy that is gathering momentum.

That was followed by a report showing that consumer confidence bounced back in August from a decline the previous month. The Conference Board, a private research group, said its index rose to 81.3 in August, somewhat higher than expectations.

In a third report on the economy, the Commerce Department said new-home sales dipped in July to 1.17 million units. That was a 2.9 percent decline from June, but still the second-best month on record.

Stocks were mixed with companies’ shares trading on news specific to them.

Intel rose 47 cents to $27.71, rebounding from earlier losses that were based on cautious comments by its chief executive, Craig Barrett. He said it was too soon to predict a recovery in the chip industry. On Friday, however, Intel raised its third-quarter revenue estimate.

Xerox rose 85 cents to $10.39 after SG Cowen upgraded it to “strong buy” from “market perform.”

Target rose 39 cents to $39.10 after the retailer said its sales last week were well above its plans.

Bristol Myers Squibb fell 30 cents to $25.51 after Sanford Bernstein downgraded the drug maker to “market perform” from “outperform.”

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