- The Washington Times - Saturday, February 22, 2003

NEW YORK (AP) The Labor Department's report of a moderate increase in inflation helped soothe Wall Street yesterday, sending stocks to their second straight winning week despite concerns about Iraq and a U.N. Security Council meeting Monday.

Many investors couldn't resist picking up bargains after four weeks of steep declines. Trading remained light, leading to exaggerated price swings.

"A lot of stocks have gotten down to levels where people want to buy them and where maybe the economy has bottomed," said Barry Berman, head trader for Robert W. Baird & Co. "But the question of Iraq and whether or not we go to war … continues to hang over the market."

"There's just not been a lot of bad news today," he added. "But how far it goes before running into more profit-taking, who knows?"

The Dow Jones Industrial Average climbed 103.15, or 1.3 percent, to close at 8,018.11, after a two-day loss of 126 points.

The broader market also finished higher. The Nasdaq Composite Index gained 17.79, or 1.3 percent, to 1,349.02. The Standard & Poor's 500 index rose 11.07, or 1.3 percent, to 848.17.

The three main gauges posted their second week of advances, a feat not seen since the period ended Jan. 10. For the week, the Dow gained 1.4 percent, the Nasdaq gained 3 percent and the S&P 500 gained 1.6 percent.

The government said consumer prices rose by 0.3 percent in January, as worries that a war with Iraq helped push up energy prices. The increase matched analysts' expectations.

Wall Street was particularly nervous prior to the release of the report after the department said Thursday that inflation at the producer, or wholesale, level jumped 1.6 percent in January, the biggest increase in 13 years. Yesterday's figures were modest in comparison. Three other economic reports Thursday also raised investors' fears about the health of the economy.

Meanwhile, the United States and Britain were preparing to present a new resolution to the U.N. Security Council on Monday in support of using force to disarm Iraq.

Iraq allowed a second flight by an American U-2 spy plane yesterday, although the United Nations said the country was still not cooperating fully with inspections.

Trading has been choppy in recent weeks, as investors made short-term bets on whether or when there will be a war with Iraq. Analysts say the market will have trouble sustaining gains because investors worry that a prolonged conflict would weaken the economic recovery.

Yesterday, an oil-storage-facility explosion at the edge of New York's Staten Island also put investors on edge. The Dow fell as much as 60 points in early trading but quickly recovered after authorities said there was no indication of terrorism.

"We had an early-morning scare relating to the fire," said Steven Goldman, chief market strategist at Weeden & Co. "Given the proximity to Wall Street and looking out the windows and seeing the billowing smoke, obvious concerns surfaced."

Target climbed $1.71, to $28.48, after U.S. Bancorp Piper Jaffray raised the retailer's stock rating to "strong buy" from "outperform."

Verizon gained 88 cents, to $35.64, after Credit Suisse First Boston raised the telecom company's stock rating to "outperform" from "neutral," citing low valuation.

Agilent rose 85 cents, to $13.45, after the maker of test and measurement equipment posted a first-quarter loss and said it would cut 4,000 jobs to reduce expenses.

Decliners included Tupperware, which dropped $1.90, to $12.89, after warning that its first-quarter results will be significantly below the prior year because the winter weather dampened sales.

BEA Systems fell 58 cents, to $10.63, after the software company reported fourth-quarter earnings that beat estimates but gave a cautious outlook for the current quarter.

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