- The Washington Times - Tuesday, February 4, 2003

NEW YORK (AP) Investors cautiously extended Wall Street's rally into a second session yesterday as lower prices temporarily offset the market's concerns about war.
The advance, also supported by better-than-expected earnings and economic news, was unsurprising after the market's three straight losing weeks and big drop for January.
Still, analysts were doubtful that any gains would be long-lived, given investors' fears that a war with Iraq would further hurt the frail economy. In a sign of investor caution, trading volume was extremely light and stocks were unable to hang on to their biggest gains yesterday.
"[The market] is not up in a convincing way. There is very little enthusiasm for buying equities at the moment … . The prospect of war still looms large in many people's thinking," said Alan Ackerman, executive vice president at Fahnestock & Co.
The Dow Jones Industrial Average closed up 56.01, or 0.7 percent, at 8,109.82, after climbing as much as 98.27 in earlier trading. The Dow lost 1 percent in the past week, its third straight losing week. Yesterday, the blue chips added to the gain of 108.68 on Friday, their biggest advance in four weeks.
The broader market also was higher, after suffering three consecutive weekly declines. The Nasdaq Composite Index rose 2.88, or 0.2 percent, to 1,323.79. The Standard & Poor's 500 index advanced 4.62, or 0.5 percent, to 860.32.
Economic news that exceeded Wall Street's expectations contributed to the market's gains. The Commerce Department reported that construction spending jumped 1.2 percent in December. The increase was larger than the 0.3 percent that analysts were predicting and marked the biggest gain in 10 months.
Also, the Institute of Supply Management said U.S. manufacturing activity grew for the third straight month in January, although the pace slowed. The private industry group said its index of manufacturing activity had a reading of 53.9, slipping from a revised 55.2 for December. A reading above 50 indicates expansion in activity, while a reading below 50 points to contraction.
But the market's gains were modest after the news, which analysts attributed to investors requiring more proof that the economy is on the mend.
"We have to see a pattern with these economic numbers. One day is not going to do it. Let's see what happens on the next round," said Stephen Carl, principal and head of equity trading at the Williams Capital Group.
Positive earnings news contributed to the market's upturn. But with fourth-quarter earnings season nearly over, Wall Street was losing a potential catalyst for gains. With mixed earnings news and a potential war, analysts say investors see no reason to commit to stocks.
Mattel rose $1.03 to $21.03 on fourth-quarter earnings that were 4 cents a share higher than Wall Street expected. Standard Pacific climbed 51 cents to $25.76 after beating expectations by 16 cents a share.
Brokerage upgrades also provided some lift.
Eli Lilly advanced $1.44 to $61.68 after Prudential Securities raised its recommendation on the drug maker to "buy" from "hold."
Abercrombie & Fitch rose 47 cents to $28.31 after Merrill Lynch raised its rating on the retailer to "buy" from "neutral."
Technology got a boost from upbeat comments by the Semiconductor Industry Association. The group's president, George Scalise, said in an interview with CNBC that he expects growth of 7 percent to 10 percent in the industry this year because of greater pricing power.
Semiconductor equipment maker Applied Materials inched up 5 cents to $12.02, recovering a small amount of its 98-cent loss from Friday after it said first-quarter orders would decline 35 percent, not 20 percent as previously projected.
The markets observed moments of silence in memory of the Space Shuttle Columbia astronauts. The shuttle explosion Saturday depressed the stocks of aerospace companies, including Boeing, which fell 48 cents to $31.11, and Lockheed Martin, off $1.50 at $49.55.
Advancing issues had a narrow lead over decliners on the New York Stock Exchange. Consolidated volume was very light at 1.53 billion shares, below an already-light 1.93 billion on Friday.
The Russell 2000 index, which tracks smaller-company stocks, fell 1.92, or 0.5 percent, to 370.25.
Overseas, Japan's Nikkei stock average finished yesterday up 1.9 percent. In Europe, France's CAC-40 rose 0.7 percent, Britain's FTSE 100 climbed 3.4 percent, and Germany's DAX index gained 0.2 percent.

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

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.


Click to Read More

Click to Hide