- The Washington Times - Thursday, January 16, 2003

NEW YORK, Jan. 16 (UPI) — Stock prices on the New York Stock Exchange were slightly higher in moderate trading at midday Thursday, lifted by favorable earnings reports and fresh economic news. Prices drifted slightly lower on the Nasdaq Stock Market.

The blue-chip Dow Jones industrial average, which dropped 119.44 points Wednesday, was ahead 37.50 points to 8,760.60. The tech-heavy Nasdaq composite index, which fell 22.19 points in the previous session, was down 1.39 points to 1,437.41.

The broader New York Stock Exchange composite index was ahead 11.84 to 5,183.29 while the Standard & Poor's 500 index was ahead 2.61 to 920.83. The American Stock Exchange composite index was ahead 2.72 points to 834.02 while the Wilshire 5000 Index was ahead 0.71 to 8,680.70.

Big Board volume rose to an estimated 591.50 million shares from 568.90 million shares changing hands during the same period Wednesday.

Analysts said earnings reports from blue-chip companies helped the stock market keep its head above water. Thursday's earnings calendar is the busiest of the week, with Microsoft, International Business Machines, General Motors, United Technologies and Delta Air Lines among just some the companies reporting results.

Dow component General Motors climbed after the world's largest automaker said its fourth-quarter profit surged fourfold on strong sales as aggressive incentives lured buyers to dealer lots despite the tepid economy.

GM said its fourth-quarter net income surged to $1 billion, or $1.71 a share, from $255 million, or 60 cents a share during the same period a year earlier. The automaker said its revenues climbed to a record $48.7 billion from $46 billion a year ago.

GM back in October said it expected to post fourth-quarter earnings of about $1.40 a share. Analysts had expected GM to post a net income of $1.53 a share, according to Thomson First Call.

Defense contractor and manufacturer United Technologies, a fellow blue-chip, all rose sharply after the company said its fourth-quarter profit soared 54 percent, to $1.06 a share, beating estimates by 2 cents as revenue rose 3.5 percent.

Meanwhile, Delta Air Lines reported a much narrower-than-expected loss and said its revenue jumped 16 percent in the fourth quarter.

After the market closes, two more Dow components will give their results for the final three months of 2002. Both will be closely watched for any sign of recovery in the tech spending.

IBM, the world's largest computer company, is forecast to report a decline in fourth-quarter profit to $1.30 a share from $1.46 a share a year earlier.

Microsoft, the largest maker of computer operating system software, is expected to show a decline in fiscal second-quarter income to 46 cents a share from 49 cents in the prior year.

Also due after the bell are workstation maker Sun Microsystems and online auctioneer eBay.

In economic news, the Labor Department said the number of Americans filing first-time applications for unemployment benefits for the week ended Saturday declined by a larger-than-expected 32,000 to a 6-week low of 392,000, compared with a drop of 19,000 in the previous week.

The numbers were a pleasant surprise on Wall Street, given that the headline number remained comfortably below the watershed 400,000 mark. Economists on Wall Street were expecting first time claims to rise by 6,000 during the week.

Meanwhile, the all urban Consumer Price Index, a key measure of inflation at the retail level, inched up 0.1 percent in December after rising the same 0.1 percent in November.

The core index, which excludes food and energy items, also rose 0.1 percent during the final month of 2002 after rising 0.2 percent in November.

Economists on Wall Street were expecting the CPI to rise 0.2 percent while the core rate was expected to rise 0.1 percent.

The latest report on inflation showed for all of 2002 the CPI rose at a 2.4 percent annual pace, compared with a 1.6-percent pace during 2001. The core rate rose at a 1.9-percent clip, compared with a 2.7-percent rate in 2001.

Analysts said the fact that prices did not rise more sharply — or drop — was good news for those keeping an eye on the economy.

Consumer prices show the effects of deflation or inflation, which economists have been watching for as the economic slump lingers. In the current environment, deflation is the more serious concern.

Economists say the economy grew a feeble 1 percent from October through December, down from 4 percent in the previous three months. U.S. consumer and business confidence, meanwhile, has wobbled amid worries that a war with Iraq could retard the economic recovery. Inflation, as a result, has ceased to be a near-term worry for investors and policymakers.

Meanwhile, U.S. Treasury prices fell. The 10-year bond lost 17/32 to 98 31/32. Its yield, which moves in the opposite direction of its price, rose to 4.13 percent from 4.06 percent late Wednesday.

In Europe, stock prices ended slightly lower in London and Frankfurt but inched higher in Paris. The London International Stock Exchange's blue-chip FTSE-100 index lost 13.9 points to 3,873.9. The German DAX index eased 2.40 points to 3.047.00 and the French CAC-40 index rose 7.93 points to 3,142.59.

Analysts said German stocks came under some pressure from a report showing the German economy growing at the slowest pace last year since the 1993 recession.

The Federal Statistics Office said Germany's economy expanded 0.2 percent in 2002 after 0.6 percent the year before.

Germany's growth rate was the slowest among the Group of Seven major industrial nations.

Meanwhile, the Bank of France lowered its estimate for expansion in the first quarter to 0.2 percent from last month's prediction of 0.3 percent. Germany is France's largest trading partner.

Earlier in Asia, prices ended little changed on the Tokyo Stock Exchange as weakness in technology issues offset strength in banking stocks. The blue-chip Nikkei Stock Average, which gained 58.69 points Wednesday, eased 2.58 points to 8,609.17.

Analysts said stocks ended almost flat on losses in high-techs following Wednesday's decline on the Nasdaq Stock Market.

Analysts said banks continued to rise as investors continued to welcome news that Sumitomo Mitsui Banking plans to raise fresh capital by issuing shares to Goldman Sachs before books close in March.

The threat of ballooning loan-loss charges under a stricter official assessment of bad loans in government inspections later in the month has pushed banks into seeking new capital.

Elsewhere in Asia, prices ended lower in moderate trading on the Hong Kong Stock Exchange. The blue-chip Hang Seng Index, which rose 77.18 points during the previous session, fell 130.26 points, or 1.3 percent, to 9,743.23.

Analysts said stocks were pressured after disappointing earnings from the U.S. on Wednesday ignited concerns of a recovery in corporate profits in the territory's second largest trading partner.

Prices ended little changed on the South Korean Stock Exchange. The Korea Composite Stock Price Index, or Kospi, which eased 1.76 points during the previous session, added 0.40 points to 648.69.

Prices ended lower on the Taiwan Stock Exchange. The key Weighted Index, which rose 25.28 points during the previous session, fell 74.41 points, or 1.5 percent, to 4,943.29.

Meanwhile, prices ended slightly lower on the Singapore Stock Exchange. The key Straits Times Index, which lost 14.75 points during the previous session, eased 7.10 points, or 0.5 percent, to 1,379.52.

Elsewhere, prices ended lower in light trading on the Australian Stock Exchange. The blue-chip All Ordinaries Index, which added 0.60 point during the previous session, lost 19.30 points, or 0.6 percent, to 3,030.30.

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