- The Washington Times - Monday, August 4, 2003

NEW YORK (AP) — Stocks began the week indecisively yesterday, closing mixed in the absence of earnings news to guide investors. But the major indexes managed to rebound from sizable early losses.

Analysts attributed the wavering to technical factors, not fundamentals. While the stock market was due for a correction, analysts said, investors were willing to sell stocks only to a certain point — about 9,050 on the Dow Jones Industrial Average and 1,690 on the Nasdaq Composite Index — based on their belief the economy is poised for good recovery in the second half of 2003. Once those gauges fell below those points, investors began buying again.

“It is all technical. … There is no news to account for it,” Peter Cardillo, president and chief strategist of Global Partner Securities Inc., said of Wall Street’s late-day turnaround.

Analysts said the gains had little if anything to do with a bigger-than-expected rise in orders to U.S. factories, because stocks had ignored the report earlier.

After falling as much as 105.39, the Dow closed up 32.07, or 0.4 percent, at 9,186.04.

The broader market was mixed, but also rebounded from steeper losses. The Nasdaq slipped 1.56, or 0.1 percent, to 1,714.06, having dropped as much as 27.85. The Standard & Poor’s 500 index advanced 2.67, or 0.3 percent, to 982.82, having shed as much as 13.36.

Analysts anticipate August will be difficult for the market as investors put off big moves ahead of the fall’s onslaught of economic data and traders take summer vacations.

With stocks well above their March 11 lows, analysts say, investors already have priced into the market a second-half economic recovery and so are likely to take some profits in the near term. At the end of yesterday’s trading, the Dow was up 22.1 percent from March 11, while the Nasdaq was up 34.8 percent and the S&P; was up 22.7 percent.

“August certainly bodes well for some sort of technical correction. Fundamentally, the market is strong. Once we get this healthy technical correction out of the way, you will see the market act quite nicely,” Mr. Cardillo said.

But in a sign of Wall Street’s growing optimism, market observers view some pullback as a positive thing.

“Taking a break is giving people time to look at the numbers and see if we are seeing improvements. And, we are seeing good improvements,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati.

Indeed, yesterday’s economic news was upbeat. The Commerce Department reported U.S. factory orders rose by 1.7 percent in June, the biggest gain in three months and stronger than the 1.5 percent gain economists predicted.

U.S. Steel rose 73 cents to $16.31 after posting a quarterly loss of a penny a share, smaller than the 6-cent shortfall analysts anticipated. The company also said revenues jumped to $2.4 billion, compared with $1.8 billion for the second quarter of 2002.

AnnTaylor advanced $1.55 to $29.25 after Wachovia Securities raised its rating on the retailer to “outperform” from “market perform.”

Knight Ridder fell 69 cents to $67.19 after UBS Warburg reduced its rating on the newspaper publisher to “neutral” from “buy.”

Monsanto declined 47 cents to $21.68 after Banc of America Securities downgraded the agriculture company to “neutral” from “buy.”

Declining issues outnumbered advancers 9-to-5 on the New York Stock Exchange. Consolidated volume totaled 1.61 billion shares, below Friday’s 1.71 billion.

Overseas, Japan’s Nikkei stock average finished yesterday down 1.7 percent. In Europe, France’s CAC-40 fell 0.9 percent, Britain’s FTSE 100 eked out a gain of 0.04 percent and Germany’s DAX index forfeited 1 percent.

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