- The Washington Times - Friday, January 3, 2003

NEW YORK, Jan. 3 (UPI) — Stock prices on the New York Stock Exchange and the Nasdaq Stock Market ended narrowly mixed in moderate trading Friday, pressured by some bouts of profit-taking and an earnings warning from Home Depot.

Having posted its third-biggest opening-day percentage gain on record by surging 265.89 points Thursday, the blue-chip Dow Jones industrial average dipped 5.83 points, or 0.07 percent, to close at 8,601.69. The tech-heavy Nasdaq composite index, on the other hand, rose 2.17 points or 0.16 percent to close at 1,387.02. On Thursday, Nasdaq had posted its strongest-ever start to a year by climbing 49.34 points in the previous session, was down 6.71 points to 1,378.14.

The broader New York Stock Exchange composite index slipped 0.58 point, or 0.12 percent, to 486.15, while the Standard & Poor's 500 index dipped 0.45 point to 908.58. The American Stock Exchange composite index rose 4.06 points to 837.67 while the Wilshire 5000 Index lost 8.26 points to 8,592.98.

Big Board volume was at an estimated 1.13 billion, while Nasdaq volume reached 1.14 billion shares.

In response to Friday's lackluster trading, Larry Wachtel, senior vice president at Prudential Securities, said, "So, the grizzled agent says to the young stand-up comic, 'Nice opening, kid! Now what?'"

"Indeed, following up on Thursday's moon shot is going to be a doozy, and compounding the task is the downward guidance from Dow component Home Depot, which has impacted retail shares. It will also be difficult to get a dramatic follow-through ahead of the weekend with a lot of players still absent," Wachtel said.

Home Depot cut its earnings expectations for its fiscal year ending in February. It also predicted that sales at stores open at least a year will fall as much as 10 percent in its fourth quarter. The home-improvement retailer had expected same-store sales to fall 3 percent to 5 percent in the quarter.

Brokers at Lehman Bros. cut its 2002 and 2003 earnings outlook for the home-improvement chain following the warning. Bank of America and Deutsche Bank downgraded the stock.

At the same time, Home Depot's rival, Lowe's, said it expects same-store sales to increase 2 percent to 4 percent in the fourth quarter.

"The dollar is weaker, trimming yesterday's gains, and crude oil continues to rise as Venezuela festers. And next Tuesday is the date President Bush will unveil his economic simulative plan, including a proposal to cut the tax on dividends, he said.

Meanwhile, on the geopolitical front, Wachtel noted, "North Korea is calling for dialogue to settle its dispute with the U.S. over Korea's nuclear programs, but the cat and mouse on Iraq continues with growing prospects for military action in February."

On the economic front, a forward-looking indicator of the nation's economy slipped in the latest week, suggesting that the economic recovery remains fragile but the country is unlikely to fall back into recession.

The Economic Cycle Research Institute's weekly leading index fell to 117.6 in the week ended Dec. 27 from 118.8 a week ago, weighed down by a growing number of first-time unemployment benefit claims. The index's growth rate, which smooths out weekly fluctuations, also fell, to minus-2.8 from minus-1.8 a week earlier.

Lakshman Achuthan, ECRI managing director, said, "The recovery remains on track but the key is still business confidence. The recovery could be derailed by near-term shocks to confidence, like a continued rise in oil prices."

The Weekly Leading Index is composed of a balance of seven major economic indicators. ECRI designs short-and long-term indexes aimed at predicting business cycles, recessions and recoveries in the world's leading economies.

Meanwhile, the Commerce Department reported construction spending rose for the third consecutive month during November, rising 0.3 percent to a seasonally adjusted annual rate of $843.2 billion.

Economists were expecting construction spending, which accounts for almost 5 percent of the nation's economy, to rise 0.2 percent during the month after rising a revised 1 percent in October, which was originally reported as improving 0.3 percent.

Meanwhile, U.S. Treasury prices nudged up. The 10-year bond gained 2/32 to 99 26/32. Its yield, which moves in the opposite direction of its price, slipped to 4.02 percent from 4.03 percent late Thursday.

In Europe, stock prices ended slightly lower in lackluster pre-weekend trading in London, Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index slipped 4.60 points to 4,004.9. The German DAX index eased 12.10 points to 3,092.94 and the French CAC-40 index eased 7.14 points to 3,187.88.

Analysts said stocks eased after spending most of the session drifting between positive and negative ground as low trading volumes compounded the volatility.

Weakness in the retail and auto sector also pressured the markets.

Earlier in Asia, prices rallied on the Hong Kong Stock Exchange in light trading, lifted by Thursday's buying binge on Wall Street. The blue-chip Hang Seng Index, which rose 44.23 points during the previous session, jumped 218.33 points, or 2.3 percent, to 9,583.85.

Analysts said stocks jumped as investor confidence was boosted by the surprise rebound in U.S. manufacturing, fanning hopes that an upturn in the United States will spur global economic recovery.

Trading activity was described as light with many investors either on holiday or reluctant to trade given a rising oil price and a possible U.S.-led war on Iraq in coming months.

Elsewhere in Asia, prices ended sharply higher on the South Korean Stock Exchange. The Korean Composite Stock Price Index, or Kospi, which rose 7.62 points during the previous session, jumped 25.93 points, or 4.1 percent, to 661.10.

Analysts said South Korean stocks were lifted by Thursday's surge on Wall Street as foreigners came back into the market as strong buyers, thinking it was a good time to return after the gains in the United States.

Prices also rose on the Taiwan Stock Exchange. The Weighted Price Index, which gained 72.42 points during the previous session, jumped 101.45 points, or 2.2 percent, to 4,626.32.

Prices also ended higher on the Singapore Stock Exchange. The Straits Times Index, which slipped lost 5.09 points during the previous session, rebounded 3.95 points, or 0.3percent, to 1,339.93.

Elsewhere around the Pacific region, prices ended higher on the Australian Stock Exchange in light pre-weekend trading. The blue-chip All Ordinaries Index, which gained 20.70 points during the previous session, rose another 29.50 points, or 0.9 percent, to 3,025.70.

Meanwhile, markets in Japan remained closed and will reopen on Monday, Jan. 6 with the blue-chip Nikkei Stock Average hovering at 8,578.95 — its lowest year-end close since 1982. For the year the Nikkei lost 18.6 percent of its value.

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