- The Washington Times - Wednesday, May 28, 2003

NEW YORK (AP) — Brushing aside a report of sluggish factory orders, Wall Street extended its rally yesterday as it focused instead on hopes for an economic rebound. Upbeat earnings reports from companies such as Krispy Kreme and Costco fed the market’s optimism.

Both the Dow Jones industrials and the Standard & Poor’s 500 posted their fifth straight day of gains, while the Nasdaq Composite Index notched a four-day winning streak.

“The market is really looking forward and the consensus is that we’re going to see a strong economic recovery in the second half,” said Keith Keenan, vice president for institutional trading at Wall Street Access, a New York-based brokerage firm.

But he added, “some of that is fueled by performance anxiety. A lot of money managers are not fully invested, and a lot of hedge funds are short, so you’re seeing a lot of unwinding.”

The Dow Jones Industrial Average closed up 11.77, or 0.1 percent, at 8,793.12, having gained 179.97 points in the previous session to its best closing level since Jan. 14.

The broader market also finished higher. The Nasdaq rose 6.55, or 0.4 percent, to 1,563.24, after advancing 46.60 points to its highest close since June 5.

The Standard & Poor’s 500 Index rose 1.74, or 0.2 percent, to 953.22, having gained 18.26 points on Tuesday to its best level since Aug. 22.

The Commerce Department reported yesterday that orders to U.S. factories for big-ticket goods fell by 2.4 percent in April from March, when they rose 1.4 percent. The decline, the largest since September, was deeper than the 1 percent drop analysts expected.

Stocks have surged in recent weeks on better-than-expected earnings and investor bets of an economic rebound by year’s end. Still, analysts caution that Wall Street may see some sharp declines on profit-taking unless investors continue to see sustained evidence of a recovery.

Wall Street looks headed toward a third straight month of gains, with the Dow up 3.7 percent so far in May, the Nasdaq up 6.8 percent and the S&P; 4 percent.

“I don’t know if this is necessarily sustainable, but then again, we’ve had a thousand instances of hope that the second half of the year is going to be better,” said Charles White, vice chairman and portfolio strategist at Avatar Associates.

“I think we’re going to continue to get some not-great news and guidance on the economy,” he added. “Given the durable-orders data, we don’t know that the manufacturing data won’t stop being a drag.”

A string of upbeat earnings news gave the market some of its lift.

Krispy Kreme climbed $2.32 to $34.18 after the doughnut chain posted quarterly profits that came in a penny a share higher than analysts’ expectations.

Toll Brothers rose $1.05 to $28.50 after the luxury homebuilder reported fiscal second-quarter operating earnings that beat Wall Street’s estimates by 4 cents per share.

Retailers also advanced. Target added $1.25 to $35.25 after the discounter said same-store sales were better than expected last week, while Costco increased $1.43 to $37.35 after posting quarterly earnings that beat estimates by 2 cents per share.

Advancing issues outnumbered decliners 4 to 3 on the New York Stock Exchange. Volume was heavy.

The Russell 2000 index, a barometer of smaller-company stocks, rose 2.77, or 0.7 percent, to 430.48.

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