- The Washington Times - Tuesday, February 11, 2003

NEW YORK, Feb. 11 (UPI) — Stock prices on the New York Stock Exchange and the Nasdaq Stock Market are higher in fairly active trading at midday Tuesday as investors digest Federal Reserve Chairman Alan Greenspan's semiannual testimony to the Senate Banking Committee.

The blue-chip Dow Jones industrial average, which rose 55.88 points Monday, was ahead 14.40 points to 7,934.50. The tech-heavy Nasdaq composite index, which gained 14.21 points in the previous session, was ahead 11.06 points to 1,307.74.

The broader New York Stock Exchange composite index was up 15.70 to 4,748.47, the Standard & Poor's 500 index was ahead 1.56 to 837.53, the American Stock Exchange composite index was ahead 1.26 points to 815.21 and the Wilshire 5000 Index was ahead 32.90 to 7,962.02.

Big Board volume rose to an estimated 571.10 million shares from 438.20 million shares changing hands during the same period Monday. Nasdaq volume jumped to 518.50 million shares from 402.60 million shares changing hands during the previous session.

Analysts said stocks rose as investors digested Greenspan's comments that uncertainties over a possible war with Iraq posed formidable barriers to business spending and made it tough to gauge the U.S. economy's health.

In his semiannual testimony to Congress, the Fed chairman devoted more time to the questions of war, budgets and taxes than he did to the traditional concerns of monetary policy.

"Indeed, the heightening of geopolitical tensions has only added to the marked uncertainties that have piled up over the past three years, creating formidable barriers to new investment and thus to a resumption of vigorous expansion of overall economic activity," he told the Senate Banking Committee.

"These are challenging times for all policy-makers," he said.

"Considerable uncertainties surround the economic outlook, especially in the period immediately ahead. But the economy has shown remarkable resilience in the face of a succession of substantial blows," the Fed chief said.

"Critical to our nation's performance over the past few years has been the flexibility exhibited by our market-driven economy and its ability to generate substantial increases in productivity. Going forward, these same characteristics, in concert with sound economic policies, should help to foster a return to vigorous growth of the U.S. economy to the benefit of all our citizens."

Greenspan's semi-annual testimony on the economy, delivered amid rancorous debate among lawmakers over Bush administration proposals for sweeping tax cuts, also included a stern warning about the urgent need to restore budget discipline.

The long-run potential of the economy will be determined in large part by decisions that Congress makes on how much to tax, spend and save.

Meanwhile, on the geopolitical front, the storm is not over, but there could be a break in the clouds.

Baghdad dropping its opposition to U-2 reconnaissance flights over Iraq engendered the hope, particularly among some investors, that the United States' impasse with Iraq could be resolved diplomatically.

There are also reports that Turkey has offered exile for Saddam Hussein, and a German official said that all but four of the 15 members of the U.N. Security Council think the weapons inspectors should be given more time.

On the economic front, Instinet Research said chain store sales fell in the first week of February as cold weather kept consumers away from stores.

As retailers depleted their winter inventories, sales at major U.S. chain stores slipped 1.6 percent in the week ended Feb. 8, compared with the same period last month, Instinet said in its weekly Redbook report.

Sales slid 0.2 percent in the week ended Feb. 8 compared with the same week a year ago, the report said. The Redbook average is compiled from a sample of general merchandise retailers representing about 9,000 stores. Same-store sales measure revenue at stores open at least a year.

U.S. Treasury prices were little changed. The 10-year bond slipped 1/32 to 100 8/32. Its yield, which moves in the opposite direction of its price, rose to 3.97 percent from 3.96 percent late Monday.

In Europe, stock prices ended higher in moderate trading in London, Frankfurt and Paris, supported by some bargain hunting and the early gains on Wall Street. The London International Stock Exchange's blue-chip FTSE-100 index gained 89.2 points, or 2.5 percent, to 3,668.3. The German DAX index rose 60.25 points, or 2.3 percent, to 2,646.34 and the French CAC-40 index rose 69.58 points, or 2.5 percent, to 2,841.84.

In Asia, prices eased on the Hong Kong Stock Exchange in light trading, pressured by weakness in the banking sector. The Hang Seng Index, which rose 81.19 points in the previous session, slid 37.23 points, or 0.4 percent, to 9,194.91.

Markets in Tokyo were closed for a national holiday. Trading will resume on Wednesday with the blue-chip Nikkei Stock Average hovering around 8,484.93 after rising 36.77 points on Monday.

Prices eased in moderate trading on the South Korean Stock Exchange after Moody's Investor Services downgraded its outlook on the country from positive to negative. The Korean Composite Stock Price Index, or Kospi, which eased 0.23 points during the previous session, slipped 1.27 points, or 0.2 percent, to 575.98.

Prices ended higher on the Singapore Stock Exchange in moderate pre-holiday trading, snapping their four-day losing streak. The Straits Times Index, which slid 2.68 points during the previous session, rose 13.24 points, or 1 percent, to 1,295.97, supported by bargain-hunting. Markets will be closed on Wednesday for a national holiday and will reopen on Thursday.

Prices ended lower on the Taiwan Stock Exchange in moderate trading. The key Weighted Index, which sank 91.50 points during its previous session, lost another 24.89 points, or 0.5 percent, to 4,618.98.

Prices also ended lower on the Australian Stock Exchange in moderate trading, pressured by weakness in the financial sector. The blue-chip All Ordinaries Index, which lost 15.90 points during the previous session, slipped another 10.20 points, or 0.4 percent, to 2,860.00.

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