- The Washington Times - Wednesday, December 3, 2003

NEW YORK (AP) — The Nasdaq Composite Index flirted with 2,000 for the first time in nearly two years yesterday, and the Dow Jones Industrial Average approached 10,000 as investors snapped up stocks but then grew cautious following a strong productivity report.

The technology-dominated Nasdaq reached 2,000 and the Dow came within 58 points of 10,000 in the early afternoon before both indexes retreated and closed mixed. Analysts said investors were optimistic but choosing to take their time in sending stocks higher.

“Folks are really starting to believe in the sustainability of the economic recovery,” said Richard J. Nash, chief market strategist at Victory Capital Management. “The productivity numbers were just spectacular” and should bring “another good surge in corporate profits.”

“The economic data is so encouraging, folks still want to get involved in the market,” he said.

The Nasdaq rose as high as 2,000.92 before falling back to 1,960.25, down 19.82, or 1 percent. The index, which saw its worst losses during the bear market of the past few years, had not traded above 2,000 since Jan. 15, 2002.

The Dow, meanwhile, closed up 19.78, or 0.2 percent, at 9,873.42. Earlier in the day, the blue-chip average rose as much as 88 points to reach 9,942.01. The last time the Dow traded above 10,000 was May 31, 2002.

The Standard & Poor’s 500 index fell 1.89, or 0.2 percent, to 1,064.73.

The Nasdaq’s return to 2,000 was a significant step in the stock market’s recovery from the heavy losses that followed the dot-com bust, recession and corporate-ethics scandals of recent years. But the index still remains well below its record close of 5,048.62, reached March 10, 2000.

Yesterday’s gains followed a Labor Department report that U.S. productivity shot up at a 9.4 percent annual rate in the third quarter. It was the best reading in 20 years and better than economists’ forecasts, as well as beating the 8.1 percent rate initially estimated by the department a month ago.

Stocks have risen in recent days, partly on investor expectations for a stronger economy. December also is typically strong for stocks as investors put year-end bonuses and dividends to work, although some analysts wonder whether shares have risen much too far, too fast.

Russ Koesterich, U.S. equity strategist at State Street Corp. in Boston, said crossing the Nasdaq 2,000 and Dow 10,000 barrier represents somewhat of a psychological breakthrough for investors.

t might explain why the Nasdaq retreated once it reached the mark.

Still, he said investors were upbeat and that in terms of valuation levels, the 1,075 level for the S&P; would be particularly significant.

“Investors are looking for reasons to buy and they’re looking to buy risk,” such as tech shares, Mr. Koesterich said. “We have the potential to close higher since December is normally a strong month. … But in the latter part of the first quarter of ‘04, the market might need to take a breather.”

Oracle Corp. rose 50 cents to $12.90, and PeopleSoft Inc. gained 41 cents to $21.49, after UBS raised both of the company’s stock ratings to “buy” from “neutral.”

Merck & Co. advanced $1.50 to $43.63 after the pharmaceutical company said it expected 2004 earnings to increase about 7 percent from this year.

General Motors Corp. rose $2.26 to $45.54 after a Goldman Sachs analyst said the automaker might raise its 2004 earnings outlook.

Decliners included Sepracor Inc., which fell $1.32 to $24.50 after the company halted development of its allergy drug Soltara.

Declining issues outnumbered advancers 5 to 4 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, a barometer of smaller company stocks, fell 8.41, or 1.5 percent, to 545.19.

Overseas, Japan’s Nikkei stock average finished 0.8 percent lower. In Europe, Britain’s FTSE 100 increased 0.3 percent, France’s CAC-40 advanced 0.9 percent and Germany’s DAX index gained 1.7 percent.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide