- The Washington Times - Tuesday, July 1, 2003

NEW YORK (AP) — A burst of late-day buying lifted Wall Street higher yesterday as investors shook off negative reports on manufacturing and construction spending, and placed bets on an improving economy.

Analysts said investors were remaining largely optimistic despite recent mixed economic data. That sentiment enabled the market’s major indexes to recover from sharp losses; the Dow Jones Industrial Average bounced back after falling as much as 114 points early in the day.

“Many money managers aren’t taking money off the table because they’re afraid of missing another 20 percent rally. The market is really looking at the economy to come back,” said Todd Leone, managing director of equity trading at SG Cowen Securities.

The Dow closed up 55.51, or 0.6 percent, at 9,040.95.

The broader market also advanced. The Nasdaq Composite Index gained 17.26, or 1.1 percent, to 1,640.06. The Standard & Poor’s 500 Index rose 7.81, or 0.8 percent, to 982.31.

The Institute for Supply Management said its manufacturing index edged up to 49.8 in June, compared with 49.4 in May. Still, the figure was lower than the reading of 51 that economists were expecting; it also suggested that manufacturing remained sluggish, because any figure below 50 indicates contraction in the sector.

Meanwhile, the Commerce Department reported that construction spending fell 1.7 percent in May from the previous month at a seasonally adjusted annual rate of $869.8 billion. It was the third straight month of declines; the figure also fell short of the 0.3 percent gain analysts were expecting.

Although stocks have rallied since March, investors are looking for stronger proof that the economy is rebounding.

Until then, trading is likely to be uneven, as it was in yesterday’s trading, analysts said.

On Monday, the S&P; closed the second quarter with its biggest three-month gain since 1998, rising 14.9 percent. The Dow and Nasdaq posted their best quarter since late 2001, gaining 13.3 percent and 21 percent, respectively.

Gainers included Starbucks, which rose 78 cents, to $25.33, after Smith Barney raised the coffee giant’s stock rating to “outperform” from “in-line,” citing good valuation.

Boeing gained 33 cents, to $34.65, after it received an order from AirTran Airways for more than 100 jets; however, Deutsche Securities also lowered Boeing’s stock rating to “hold” from “sell.”

But Cheesecake Factory dropped $1.84, to $34, after Smith Barney lowered the chain’s stock rating to “underperform” from “in-line.”

SAP lost 37 cents, to $28.85, after J.P. Morgan cut the software manufacturer’s rating to “overweight” from “neutral.”

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