- The Washington Times - Monday, January 6, 2003

NEW YORK, Jan. 6 (UPI) — Stock prices on the New York Stock Exchange and the Nasdaq Stock Market ended sharply higher Monday as investors looked toward Tuesday and President Bush's expected proposals of a sweeping package to jump-start a plodding economy.

The blue-chip Dow Jones industrial average, which slipped 5.83 points

Friday, gained 171.88 points to close at 8,773.57. The tech-heavy Nasdaq composite index, which added 2.23 points in the previous session, added 34.18 points to close at 1,421.26.

The broader New York Stock Exchange composite index gained 9.55 points to close at 495.71 while the Standard & Poor's 500 index added 20.44 points to close 929.03.

The American Stock Exchange composite index was flat, adding 1.98 points to close at 839.0.

Volume was 1.68 billion on the Big Board and 1.49 billion on the Nasdaq Stock Market.

Analysts said stocks climbed as investors applauded early details of Bush's economic stimulus package, expected Tuesday, on hopes that possible tax cuts would help boost corporate profits.

Bush is expected to propose eliminating the taxes individuals pay on

stock dividends, accelerating income-tax-rate cuts approved two years ago and providing $400 rebate checks for middle-class parents as well as new spending measures.

Details on the stimulus plan helped offset worries about a possible

U.S.-led war with Iraq, experts said.

Meanwhile, Banc of America strategist Thomas McManus raised his 12-month target for the Standard & Poor's 500 Index to 1,100 from 1,000, saying he expects a modest recovery in corporate profits.

McManus also raised his target for the Dow Jones industrial average to 10,600 from 9,400 and predicted that the Nasdaq Composite Index could rise as high as 1,800.

In a note to clients, McManus said that his heightened optimism for the indices rests on an earnings recovery of about 9 percent in 2003 and 2004.

But, analysts have said the market needs more upbeat news about earnings and the economy before embarking on another upward trend.

After three years of dismal declines, investors are wary about 2003 and are postponing committing to the market ahead of fourth-quarter earnings results, which companies will begin releasing in earnest in two weeks.

Meanwhile, putting a damper on the party, the Institute for Supply

Management said business activity in the non-manufacturing sector of the

economy during December grew at a slower pace than in November. The group's much-watched non-manufacturing business activity index fell 2.7 points to 54.7 from 57.4 in November.

Economists on Wall Street were expecting the index of business other than manufacturing to decline to 55.5 during the month. A reading of more than 50 suggests expansion.

December's index indicated a drop in the rate of growth but extends to 11 the consecutive months of growth that began in February 2002.

The institute last Thursday reported that the nation's manufacturing

sector grew in December for the first time since August. Financial markets surged that day, largely as a result of the upbeat report, which provided a tentative sign that the U.S.'s hard-hit industrial sector is beginning to heal.

Ralph G. Kauffman, chairman of the Institute for Supply Management's

Non-Manufacturing Business Survey Committee said, "In December,

non-manufacturing business activity increased for the 11th consecutive

month. The reported growth indicates a slower rate of expansion than

reported in November.

"Also in December, new orders grew at a slower rate than in November, and the backlog of orders index indicated the fourth consecutive month of increase in order backlogs," Kauffman said.

And AT&T; warned of a $240-million restructuring charge in the fourth

quarter as it cuts about 3,500 jobs. The charge will reduce earnings for the period by 20 cents a share.

Meanwhile, U.S. Treasury prices fell. The 10-year bond dropped 10/32 to 99 18/32. Its yield, which moves in the opposite direction of its price, jumped to 4.05 percent from 4.02 percent late Friday.

In Europe, stock prices ended slightly lower in London, but inched higher in Frankfurt and Paris. The London International Stock Exchange's blue-chip FTSE-100 index slipped 11.7 points to 3,993.2. The German DAX index rose 27.55 points to 3,120.49 and the French CAC-40 index added 22.39 points to 3,210.27.

In Asia, prices rose on the Tokyo Stock Exchange in a shortened trading session, lifted by strength in blue chips following last week's gains on Wall Street. The blue-chip Nikkei Stock Average rose 134.38 points, or 1.6 percent, to 8,713.33 in the first trading day of its new year.

Trading activity was light following the new year's holidays as Tokyo was open for only a half-day. Full trading resumes Tuesday.

Last Monday, the Nikkei closed out 2002 down 19 percent for the year and its worst year-end close since 1982. Japan's financial markets were closed most of last week for an extended New Year's holiday.

Re-opening after the 4-day break, traders said the relatively buoyant

mood was inspired by Wall Street's new year performance last week.

Gains extended across all sectors, with blue-chip exporters pacing the rally. But lingering cautious due to the possibility of war breaking out in Iraq made investors reluctant from trading actively.

Prices on the Hong Kong Stock Exchange extended their New Year rally, gaining for the third consecutive session in anticipation of measures to spur growth in the United States, Hong Kong's second-largest trading partner. The blue-chip Hang Seng Index rose 82.11 points, or 0.9 percent, to 9,665.96.

Stocks ended slightly higher on the South Korean Stock Exchange as market sentiment improved on hopes of a diplomatic solution to North Korea's nuclear threat. The Korea Composite Stock Price Index, or Kospi, rose 5.61 points, or 0.9 percent, to 666.71.

Market sentiment was fragile even after North Korea reportedly said it's willing to peacefully settle U.S. concerns over North Korean nuclear facilities.

Prices also ended higher on the Taiwan Stock Exchange. The key Weighted Index rose 63.54 points, or 1.5 percent, to 4,695.55 on hopes for further gains in U.S. stocks.

Singapore stocks ended lower on economic uncertainties following a

lackluster showing on Wall Street Friday. The Straits Times Index fell 8.31 points, or 0.6 percent, to 1,331.62.

Elsewhere around the Pacific region, prices ended higher on the Australian Stock Exchange, boosted by gains in banking stocks. The All Ordinaries Index rose 19.10 points, or 0.6 percent, to 3,044.80.

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