- The Washington Times - Wednesday, October 1, 2003

NEW YORK (AP) — Wall Street rebounded yesterday as reports of manufacturing and construction spending growth brought buyers back to the market after nearly a week of declines. The Dow Jones Industrial Average climbed 194 points to post its biggest gain since June.

The Standard & Poor’s 500 index notched its best advance in six months, and the Nasdaq Composite Index had its biggest jump in about three months.

Analysts said the reports soothed investors who were nervous after a Midwest report on Tuesday suggested that manufacturing activity might be deteriorating. Many also were jumping back in after end-of-quarter “window-dressing,” when fund managers often sell to lock in big gains.

“People were concerned that today’s figures would be much weaker, but they came in roughly in line, so it helped support the market’s gain,” said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm.

The Dow closed up 194.14, or 2.1 percent, at 9,469.20, more than recouping the 105-point decline Tuesday that was the fourth losing session in five. The advance yesterday was the biggest point gain since June 16, when the blue-chip average rose 201.84.

The broader market also advanced. The Nasdaq gained 45.31, or 2.5 percent, to 1,832.25. It was the biggest jump since July 7, when the tech-focused index climbed 57.25 points.

And the S&P; 500 rose 22.25, or 2.2 percent, to 1,018.22. It was the biggest advance since April 2, when the index climbed 22.42 points.

The Institute for Supply Management reported yesterday that its manufacturing index was at 53.7 last month, down from 54.7 in August. The figure was below estimates of 54.8, but it still reflected a growing economy as a reading above 50 indicates expansion.

Meanwhile, construction spending came in at a seasonally adjusted annual rate of $882.7 billion in August, representing a 0.2 percent increase from July, the Commerce Department reported. The level was the highest since January, although it was slightly below estimates of 0.4 percent growth.

Stocks have moved mostly higher since mid-March, but lately investors have been questioning whether the valuations might be too high. That led to some declines last month that gave the Dow and S&P; their first losing month since February; Nasdaq posted its first monthly loss since January.

Mr. Dunay cautioned that trading might be uneven in the weeks ahead as the third-quarter earnings season begins in earnest. Investors will be seeking signs of strong revenue growth rather than profit gains from cost cutting.

“Earnings next week are the real test of what the market is looking for,” he said. “Most indications are that revenue and earnings would be good. But the problem is the expectation” of investors might be too high.

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