- The Washington Times - Monday, November 3, 2003

NEW YORK (AP) — Wall Street surged again yesterday, lifting the Nasdaq Composite Index to its best close in nearly 22 months as investors welcomed reports of strong growth in the nation’s manufacturing sector and a hefty rise in construction spending.

The economic figures were “dynamite,” and part of a trend of positive news that has added to the markets’ momentum since the rally first began in March, said Alfred E. Goldman, chief market strategist with A.G. Edwards & Sons Inc. in St. Louis. But he warned there may be some pullback ahead.

“It’s positive for the long term, but short term we’ve come an awful long way in a short period of time,” Mr. Goldman said. “I think the odds favor some sort of pause to refresh.”

The Nasdaq was up 35.49 points, or 1.8 percent, at 1,967.70, after last week’s 3.6 percent advance. The technology-dominated index had its best close since Jan. 17, 2002, when it stood at 1,985.82.

The Dow Jones Industrial Average closed up 57.34, or 0.6 percent, at 9,858.46, having gained 2.3 percent last week. It was the highest closing level for the Dow since May 31, 2002, when it stood at 9,925.25.

The Standard & Poor’s 500 index closed up 8.31, or 0.8 percent, at 1,059.02, having risen 2.1 percent. The S&P; last closed higher on May 31, 2002, when it reached 1,067.14.

Wall Street was pleased with news that the manufacturing sector grew in October for the fourth straight month. The Institute of Supply Management said its manufacturing index rose to 57 last month from 53.7 in September, a stronger showing than the 55.5 analysts expected.

An index reading above 50 indicates expansion; one below 50 indicates that manufacturing activity is contracting. From March through June, the manufacturing index was below 50.

Also yesterday, a government report showed that construction spending reached an all-time monthly high in September, underscoring the housing market’s role in the economic recovery. The Commerce Department reported a 1.3 percent jump in the total value of all building projects. Analysts projected a more modest advance of about 0.4 percent.

Good economic data, merger news and generally strong financial results helped the markets climb last month. But with the earnings season winding down, investors may have little incentive to send stocks higher.

Despite mounting evidence that the economy is recovering, a number of investors remain hesitant to jump into the market. Their savings accounts hold great potential, said Ned Riley, chief investment strategist at State Street Global Advisors.

“What’s carrying it forward now is that both the Dow and Nasdaq are coming close to round numbers, which to me means nothing, technically, but which psychologically can be quite encouraging for investors,” Riley said. “Not everybody has bought into the fact that this is nirvana again … that shows there’s still room for an upside.”

In third-quarter results announced yesterday, cable firm Charter Communications Inc. swung to a profit, beating analysts’ expectations. Charter dipped 22 cents, or 5.2 percent, to close at $4.05.

Kellogg Co. also beat Wall Street expectations, reporting a 14 percent rise in earnings on strong sales. A bright outlook for the full year helped the cereal maker gain $1.77 to close at $34.90.

Teva Pharmaceutical Industries Inc. also posted solid earnings on stronger-than-expected sales. The Israel-based drug company closed up $1.48 at $58.40.

There was heavy trading in the financial services sector yesterday as Congress heard testimony on abuses in the mutual fund industry. Marsh & McLennan Cos. Inc., parent company of Putnam Investments, closed up $2.13, nearly 5 percent, at $44.88, after the chief executive of its mutual fund unit resigned in the face of civil fraud allegations.

Investors also showed interest in technology stocks after an industry report that global sales of semiconductors rose 6.5 percent in September, their sharpest jump since 1990. The Philadelphia Semiconductor Index leapt 19.25 points, or nearly 4 percent, to 515.77.

Sun Microsystems gained more than 11 percent after Merrill Lynch and American Technology Research issued research favorable reports. The computer-and-software maker closed up 44 cents at $4.39.

Advancers outnumbered decliners nearly 2 to 1 on the New York Stock Exchange. Volume was moderate, with 1.35 billion shares traded, compared with 1.45 billion traded during Friday’s session.

The Russell 2000 index, which tracks smaller company stocks, was up 9.62, or 1.8 percent, at 537.84.

Overseas, Japan’s Nikkei stock average finished 1.3 percent lower Monday. In Europe, France’s CAC-40 advanced 2 percent, Britain’s FTSE 100 rose 1.1 percent and Germany’s DAX index gained 2.4 percent.

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