- The Washington Times - Monday, July 7, 2003

NEW YORK (AP) — A burst of optimism about second-quarter earnings propelled stocks sharply higher yesterday, lifting the Dow Jones Industrial Average more than 140 points. The Nasdaq Composite Index shot above 1,700 for the first time in 14 months.

A report that Microsoft might pay a special dividend and a survey from Goldman Sachs predicting a turnaround in technology spending contributed to the market’s gains.

Analysts say investors are upbeat about second-quarter earnings, which companies start releasing this week, and are eager to buy stocks before a full-fledged rally gets under way.

“Market psychology has so much to do with where the market goes. All of a sudden people feel good again and they want to come to the stock market,” said Michael Murphy, head trader at Wachovia Securities in Baltimore.



After gaining as much as 190.91, the Dow closed up 146.58, or 1.6 percent, at 9,216.79. The Dow gained 0.9 percent last week, despite a 72.63-point loss Thursday. The market was closed Friday for Independence Day.

The broader market also advanced. The Nasdaq advanced 57.25, or 3.4 percent, to 1,720.71. The last time the Nasdaq finished above 1,700 was May 20, 2002, when it closed at 1,701.59. Yesterday’s close was the index’s highest since May 17, 2002, when it stood at 1,741.39.

The Standard & Poor’s 500 Index rose 18.72, or 1.9 percent, to 1,004.42.

Analysts credited the advance mostly to investors feeling confident that companies will report better-than-expected second-quarter earnings, building on the strong first-quarter results that triggered the market’s rally. Some on Wall Street have been calling this buying spree, which began in mid-March, the start of the next bull market.

“Come Friday, this bull market is 4 months old and hasn’t corrected. When a bull market lasts that long and doesn’t give ground, you embrace it,” said Larry Wachtel, market analyst at Prudential Securities.

Among Monday’s winners, Microsoft rose 97 cents, to $27.42, on a report in the Financial Times that the company might pay a special dividend of $10 billion to shareholders.

Mr. Wachtel said investors cheered the report because they have been more attracted to dividend-paying stocks. Interest in dividends picked up during the 3-year-old bear market, when investors were looking for guaranteed income.

But dividends have become even more sought after since the $350 billion tax-cut package was signed into law in May. Under the law, dividends will be taxed at a maximum rate of 15 percent from 2003 through 2008, down from rates as high as 38.6 percent.

Technology shares rose after Dow Jones Newswires reported that Goldman Sachs predicted companies’ spending on technology could soon rise, based on a survey of business sentiment published yesterday.

Dow Jones quoted Goldman analyst Laura Conigliaro as saying, “Although spending intentions remain guarded, our panel shows some increased optimism on second-half spending and early expectations of moderate growth in 2004.”

Tech gainers included Intel, rising $1.18, to $22.91, and Cisco Systems, rising 72 cents, to $18.22.

Brokerage house upgrades also contributed to Monday’s gains.

Morgan Stanley rose $1.38, to $46.18, on an upgrade to “buy” from “neutral” by Merrill Lynch, while Bebe stores rose $1.50, to $22.41, after First Albany raised its rating to “buy” from “neutral.”

Kroger rose 39 cents, to $17.27, after Sanford Bernstein upgraded the supermarket company to “outperform” from “market perform.”

And Alcoa rose 41 cents, to $25.71, ahead of earnings expected today. Alcoa is the first Dow industrial to report quarterly results.

Advancing issues outnumbered decliners more than 2 to 1 on the New York Stock Exchange. Volume was moderate at 1.39 billion shares. On Thursday, when the market closed three hours early for the long holiday weekend, volume was 769.61 million shares.

The Russell 2000 index, which tracks smaller-company stocks, rose 9.36, or 2.1 percent, to 465.71.

Overseas, Japan’s Nikkei stock average advanced 2.6 percent. In Europe, Britain’s FTSE 100 advanced 1.3 percent, France’s CAC-40 advanced 3.6 percent and Germany’s DAX index advanced 2.9 percent.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.

 

Click to Read More and View Comments

Click to Hide