- The Washington Times - Friday, December 12, 2003

NEW YORK (AP) — The Dow Jones Industrial Average closed above the 10,000 milestone for a second day yesterday as investors shrugged off a downbeat report on consumer sentiment to push stocks higher.

Generally strong economic news and positive outlooks from companies such as United Technologies Corp. and Coca-Cola Co. helped keep the Dow index of 30 actively traded stocks in the positive range for the third week in a row.

“The real resistance level now will be 10,150,” said Tim Smalls, a trader at SG Cowen Securities. “People are still very skeptical after losing money over the last four years, but this market is slowly winning them over.”

The Dow Jones Industrial Average closed up 34 points, or 0.3 percent, at 10,042, gaining 1.82 percent for the week. The index closed above the 10,000 mark Thursday for the first time in 18 months, largely on a strong retail sales report for November and comments from the Federal Reserve suggesting that interest rates were unlikely to rise anytime soon.

The broader market gauges also closed modestly higher. The Nasdaq Composite Index ended the day up seven points, or 0.3 percent, at 1,949, gaining 0.58 percent for the week. The Standard & Poor’s 500 index closed up three points, or 0.3 percent, at 1,074, for a weekly gain of 1.19 percent.

Wall Street welcomed a government report that wholesale prices declined more than expected, suggesting inflation remains well under control, and appeared unconcerned about news that the trade deficit had widened slightly. Stocks stumbled a bit after a survey by the University of Michigan said consumer confidence was waning, but pushed higher by the end of the session.

The university’s preliminary report for December was said to have shown a sharp decrease in consumer sentiment, to 89.6 from 93.7 in November, Dow Jones Newswires reported, citing people who had seen the data. Analysts had forecast a reading of 95.2 for mid-December. The survey is released only to subscribers.

“Of the three reports, that was the most important and probably dampened some of the enthusiasm that surfaced yesterday with the retail sales report,” said Lynn Reaser, chief economist and senior market strategist at Banc of America Capital Management. “We still need to see whatever revisions there are to be made and how consumers actually behave.”

The Labor Department reported a 0.3 percent drop in the Producer Price Index, which measures prices of goods before they reach store shelves. Economists had forecast a 0.1 percent rise. The reading supported the idea that the economic recovery is not fanning inflation, and bolstered hopes that interest rates would stay low.

Separately, the Commerce Department said the trade deficit soared to $41.77 billion in October. Shoppers’ preference for imports hit a record high, offsetting a sizable gain in exports, including the best showing for sales of farm products in seven years. The October trade imbalance was up 1 percent from a September deficit of $41.34 billion and was the biggest deficit in five months.

The dollar fell to a record low against the euro and a three-year low against the yen yesterday.

But Treasury Secretary John Snow said the slide hasn’t disrupted financial markets or the U.S. economy.

“This whole adjustment process has been orderly, and the dollar on a trade-weighted basis is still higher today than it has been for most of the last 25 years,” he said in New York in a televised interview with Bloomberg News.

Investors sold the U.S. currency following the treasury chief’s comments amid speculation the Bush administration welcomes a weaker dollar as a means of boosting growth through exports.

Against the euro, the dollar weakened to $1.228 at 5 p.m. from $1.223 late Thursday. The dollar fell to 107.88 yen from 108.05. On Tuesday it reached 106.75 yen, the lowest in more than three years.

There were signs that investors were not sure the stock market gains would hold through the holiday season. Retailing bellwether Wal-Mart Stores Inc. lost 31 cents to end the day at $52.50.

AT&T; Corp. closed down 64 cents, at $18.98, after lowering the revenue outlook for its business services unit, citing pricing pressures. The telecommunications company said it would adopt an aggressive strategy to fight competition.

Advancers included Coca-Cola Co., which gained 98 cents to close at $49.37 after it told analysts it was “poised for a strong year” in 2004. The beverage titan forecast long-term earnings-per-share growth of 11 percent to 12 percent, and expects cash from operations to remain strong next year.

Advancers outnumbered decliners about 2-to-1 on the New York Stock Exchange. Consolidated volume was lighter, with 1.57 billion shares traded, compared with 1.82 billion shares on Thursday.

The Russell 2000 index, which tracks smaller company stocks, closed up 4.67, or 0.9 percent, at 547.59.

Overseas, Japan’s Nikkei stock average finished 0.9 percent higher. In Europe, France’s CAC-40 rose 0.1 percent, Britain’s FTSE 100 gained 0.4 percent, and Germany’s DAX index was essentially flat, up 0.03 percent.

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