- The Washington Times - Monday, March 1, 2004

NEW YORK (AP) — The Dow Jones Industrial Average and Nasdaq Composite Index posted their strongest gains since early February yesterday on news that the improving manufacturing sector has managed to create jobs — a key piece of the economic recovery that has been lacking.

Manufacturing further expanded in February, although at a slightly slower pace than expected, according to the Institute for Supply Management. Analysts said the sector was consolidating its gains and preparing for stronger growth in the future.

Although the ISM’s main business index fell to 61.4 in February compared with a revised 63.6 in January, analysts noted that the group’s subindex for employment was surprisingly higher. The employment index rose to 56.3 from 52.9.

“This helps support the feeling that the employment picture is improving,” said Peter Dunay, chief market strategist at Wall Street Access. “Everything we’ve been seeing is that employment is getting better, but it’s not where everyone wants it to be.”

The Dow jumped 94.22, or 0.9 percent, to 10,678.14, its biggest one-day point gain since Feb. 11. The Nasdaq rose 27.98, or 1.4 percent, to 2,057.80, posting its biggest gain since Feb. 6.

The Standard & Poor’s 500 index was up 11.02, or 1 percent, at 1,155.96, posting its biggest one-day gain since Feb. 17.

Another indicator of employment growth will come Friday as the government issues its report on job creation during February. Andrew Valerie, senior vice president and equity strategist at LPL Financial Services, said that number will come under close scrutiny.

“The data has to find a really fine line of not being overly strong over overly weak,” Mr. Valerie said. “Too low, you get worries about the lack of jobs. Too high, you start wondering about interest rate hikes.”

Semiconductor stocks were mixed as J.P. Morgan analysts downgraded the entire sector, citing soft demand for microchips. Intel Corp. gained 49 cents to $29.69, while rival Advanced Micro Devices Inc. dropped 11 cents to $14.89.

Sepracor Inc., whose insomnia medication received tentative approval from the U.S. Food and Drug Administration, skyrocketed $15.99, or 56 percent, to $44.30. Another pharmaceutical firm, MedImmune Inc., sank $1.59 to $24.10 after reducing its 2004 outlook.

Sprint Corp. rose $1.48 to $19.21 after Goldman Sachs upgraded the stock because of an improving 2004 outlook.

With closing arguments under way in Martha Stewart’s trial, investors sent shares of Martha Stewart Omnimedia Inc. down 61 cents to $13.92.

The judge in the case dismissed the most serious of the charges last week.

The Russell 2000 index of smaller companies was up 9.21, or 1.6 percent, at 594.77. It was the Russell 2000’s biggest one-day gain since Feb. 17.

Advancing issues outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where consolidated volume came to 1.88 billion shares, compared with 1.96 billion Friday.

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