- The Washington Times - Thursday, February 20, 2003

NEW YORK, Feb. 20 (UPI) — Stock prices on the New York Stock Exchange were lower in light trading at midday Thursday as investors waded through a fresh barrage of disappointing reports on the economy.

Stocks were little changed on the Nasdaq Stock Market, drawing some support from semiconductor issues.

At midday, the blue-chip Dow Jones industrial average, which lost 40.55 points Wednesday, was down 46.00 points to 7,954.60. The tech-heavy Nasdaq composite index, which fell 12.22 points in the previous session, was ahead 0.32 points to 1,334.64.

The broader New York Stock Exchange composite index was down 9.97 to 4,753.48, the Standard & Poor's 500 index was down 2.89 to 842.24, the American Stock Exchange composite index was ahead 1.18 points to 814.90 and the Wilshire 5000 Index was down 34.28 to 7,961.44.

Big Board volume declined to an estimated 505.30 million shares from 516.20 million shares changing hands during the same period Wednesday. Nasdaq volume rose to 543.50 million shares from 506.90 million shares changing hands during the previous session.

Analysts said blue-chip stocks were weighed down by several disappointing reports on the economy.

On the economic front, the Labor Department said producer prices in January surged 1.6 percent, their biggest increase in 13 years, after coming in unchanged for December. That number took economists, who had expected an increase of 0.5 percent, by surprise and raised concerns of inflation.

Excluding the volatile food and energy sectors, the PPI picked up 0.9 percent. There, economists had expected a 0.1 percent gain.

Jobless claims also served as a bit of a damper. The Labor Department said initial jobless claims rose by a larger-than-expected 21,000 to 402,000 in the week that ended Feb. 15. The increase was the first in three weeks and it raised the total above the 400,000 mark, which economists say correlates with a rising unemployment rate.

The Commerce Department reported that the December trade gap came in at a record $44.2 billion compared with expectations of a gap of $38.6 billion. That raised the chances that fourth-quarter gross domestic product will be revised lower, and may mean that the economy contracted in the fourth quarter.

And, the Conference Board said its key measure of future economic activity held steady during January as a sharp decline in new claims for unemployment insurance offset the weak expectations of consumers.

The Board said the composite index of leading economic indicators remained at 111.2 in January after rising 0.2 percent in December and 0.5 percent in November. The Board noted the leading index remained well above its peak prior to the 2001 recession and just below the previous high achieved in May 2002.

Economists on Wall Street were expecting the gauge of the economy's performance over the next three to six months to decline 0.1 percent during the month.

Despite the weak economic data, analysts said investors were flocking to semiconductor stocks after brokers at Merrill Lynch raised their stance on the group and upgraded a number of stocks in the sector.

Merrill upgraded stocks, including Intel, Analog Devices, and Vitesse Semiconductor to neutral from sell, citing reasonable valuation, low inventory and a tendency for the low capital spending to increase.

Experts noted trading activity was held in check ahead of Friday's expiration of stocks and index options for February. Options watchers have noted that there is a mass of puts — bets that stocks will go down — out there.

Meanwhile, U.S. Treasury prices were slightly higher. The 10-year bond rose 6/32 to 100 4/32. Its yield, which moves in the opposite direction of its price, slipped to 3.86 percent from 3.88 percent late Wednesday.

Treasurys were little changed to higher after ignoring some potentially market-damaging economic data, as traders continue to focus on risks of war and terrorism.

Market activity was said to be dominated by traders and other speculators, rather than by money managers or mutual funds, as most participants continued to hold on the sidelines as risks abound in the market.

In Europe, stock prices ended higher in London in moderate trading, but declined in Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index gained 20.4 points, or 0.6 percent, to 3,678.7. The German DAX index fell 33.02 points, or 1.2 percent, to 2,591.63 and the French CAC-40 index lost 54.70 points, or 1.9 percent, to 2,804.49.

Analysts said British stocks were lifted as investors digested a handful of favorable corporate results. German and French stocks were pressured by the early losses on Wall Street.

In Asia, prices on the Tokyo Stock Exchange ended lower for the third consecutive session, pressured by weakness in the banking sector. The blue-chip Nikkei Stock Average, which lost 14.53 points during the previous session, slipped another 27.52 points, or 0.3 percent, to 8,650.92.

Experts said stocks closed lower for a third straight session on weakness in the banking sector and as some exporters were hit by the firmer Japanese yen.

Analysts noted the market drew little support from a published report that the government may delay by up to two years the implementation of a law that will force banks to cut back on their shareholdings.

The offloading of shares by banks, due to a rule that they will have to limit stockholdings to an amount below their core capital from September 2004, has been a big factor weighing on the market, especially hitting widely held shares.

Elsewhere in Asia, stocks ended slightly lower on the Hong Kong Stock Exchange, pressured by weakness in the property sector. The blue-chip Hang Seng Index, which added 30.58 points in the previous session, lost 37.15 points, or 0.4 percent, to 9,390.48.

Analysts said stocks eased as losses in the property sector offset gains in banking stocks, but renewed war worries kept most investors at bay.

Prices ended little changed on the Taiwan Stock Exchange. The key Weighted Price Index of the Taiwan Stock Exchange, which dropped 54.48 points in the previous session, eased 0.13 point to 4,550.70.

Meanwhile, stocks eased on the Singapore Stock Exchange as the Straits Times Index, which rose 21.72 points during the previous session, slipped 3.12 points, or 0.2 percent, to 1,312.41.

Prices ended higher in moderate trading on the South Korean Stock Exchange, despite news of a North Korean fighter jet briefly entering South Korean airspace. The Korea Composite Stock Price Index, or Kospi, which slipped 2.62 points during the previous session, gained 4.68 points, or 0.8 percent, to 605.51.

Prices ended lower on the Australian Stock Exchange, pressured by Wednesday's decline on Wall Street. The blue-chip All Ordinaries Index, which rose 21.00 points during the previous session, fell 43.40 points, or 1.5 percent, to 2,806.50.

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