- The Washington Times - Friday, January 2, 2004

NEW YORK (AP) — Wall Street began the new year yesterday with some of the same enthusiasm that marked its big comeback in 2003 — stocks surged in early trading on upbeat economic news, but investors later took some profits in blue chips and left prices mixed.

Light volume exaggerated yesterday’s price moves, and investors might have been a bit jittery because of heightened terrorism concerns that disrupted international air travel. Still, the major indexes eked out gains for the week.

Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee, warned against reading too much into the results.

“The volume is very light,” he said. “I’d wait to see what the trading is like next week, when everyone is back.”

The Dow Jones Industrial Average was down 44.07, or 0.4 percent, at 10,409.85 yesterday but up 0.8 percent for the week. Earlier in the day, after a stronger-than-expected report on manufacturing, the Dow was up more than 74 points.

Broader stock indicators were mixed. The Standard & Poor’s 500 index dropped 3.44, or 0.3 percent, to 1,108.48 but was up 1.1 percent for the week. The Nasdaq Composite Index rose 3.31, or 0.17 percent, to 2006.68 and was up 1.7 percent for the week.

The Dow and the S&P; 500 had their sixth straight weekly gains, while the Nasdaq had its second straight up week.

Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif., said the meandering market was a reflection of the low volume.

“On days like that, we sometimes see dramatic moves when buy or sell programs kick in,” he said.

Still, Mr. Lydon said investors have good reason to be optimistic about the new year: It’s an election year, interest rates remain at 40-year lows and corporations chastised for bad practices have reformed.

“The market is starting to be fun again, but not yet to the point where cabdrivers are giving you investment tips,” he said.

For all of 2003, the Dow gained 25.3 percent, the Nasdaq surged 50 percent and the S&P; 500 gained 26.4 percent. The markets were closed Thursday for the New Year’s holiday.

The market initially rallied yesterday after the Institute for Supply Management said its manufacturing index rose to 66.2 in December from 62.8 in November. Most analysts had expected the index to dip.

Norbert J. Ore, chairman of the institute’s business survey committee, said the reading meant “the manufacturing sector enjoyed its best month since December 1983.”

He said much of the momentum was in orders, which bodes well for economic growth in 2004.

Countering the positive economic news was continuing concern about terrorism. More than a half-dozen New Year’s holiday flights were disrupted as U.S. authorities tightened the air safety net around the country with flight cancellations, airline searches and fighter jet escorts for some planes.

Big movers on Wall Street included a pair of rival drug wholesalers. Both took a beating after one took a government contract from the other at a price analysts considered too high.

AmerisourceBergen Corp. shares continued to slide after the Chesterbrook, Pa., drug wholesaler announced Wednesday it lost its Department of Veterans Affairs prime pharmaceutical-vendor contract. The contract, awarded to McKesson Corp. of San Francisco, was valued at about $3 billion annually.

AmerisourceBergen lowered its earnings forecast, and analysts downgraded the stock yesterday. Several also lowered McKesson, worried that it had traded revenue for volume. AmerisourceBergen shares were down $2.15, or nearly 4 percent, at $54.00. Shares of McKesson fell $1.30, or more than 4 percent, to $30.86.

Advancing shares were slightly ahead of decliners on the New York Stock Exchange, with consolidated volume at 1.5 billion shares, up from 1.32 billion on Wednesday.

The Russell 2000 index of smaller-company stocks was up 3.94, or 0.7 percent, at 560.85.

Overseas, Japan’s markets were closed for the New Year’s holiday. Britain’s FTSE 100 closed up 0.74 percent, Germany’s DAX index rose 1.35 percent, and France’s CAC-40 gained 1.09 percent.

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