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Stocks Rally on Recovery Hopes

S&P 500 and Nasdaq indexes record a third straight week of gains. Airlines and tech firms are among the biggest winners on Wall Street.

May 03, 2003|From Times Staff and Wire Reports

Stocks finished sharply higher Friday as investors shrugged off a weak report on the U.S. job market and pinned their hopes on an eventual economic recovery.

Stocks rose across all sectors, with airlines and technology companies among the biggest gainers. All except two of the 30 members of the Dow Jones industrial average ended higher.

"Since the year 2000, people have been saying there will be a recovery in the second half of the year -- but now people are starting to believe it," said Arnie Owen, managing director of equities at Roth Capital Partners.

The Dow Jones industrial average finished up 128.43 points, or 1.5%, at 8,582.68. The Standard & Poor's 500 index rose 13.78 points, or 1.5%, to 930.08.

The tech-laden Nasdaq composite index climbed 30.32 points, or 2.1%, to 1,502.88 -- closing above the psychologically important 1,500 level and notching its highest close since June 2002.

The rally was broad and deep. Winners outnumbered losers 3 to 1 on the New York Stock Exchange and 5 to 2 on Nasdaq. Trading was heavy as buyers bulled into the market.

The S&P 500 and Nasdaq indexes recorded their third straight week of gains. For the week, the S&P 500 added 3.5%, the Dow gained 3.3% and the Nasdaq climbed 4.8%.

Stocks opened lower and then rose steadily, underpinned by hopes for faster growth in the economy later this year.

Investors largely ignored a report showing that the U.S. economy shed jobs for the third straight month in April and the unemployment rate hit a four-month high at 6%.

Separate data showed that orders for U.S. manufactured goods rose by 2.2% in March, their best showing since July 2002.

The factory orders report was unexpectedly upbeat for the troubled sector, which has been the weakest segment of the lagging economy.

"Those factory orders mean somebody somewhere sees the demand for products increasing, and for Wall Street that means companies have the money for spending," said Joseph Zock, president and portfolio manager at Capital Management Associates.

The dollar rose against the yen and was little changed against the euro.

Treasury yields jumped on the stronger-than-expected economic data, the yield on the benchmark 10-year Treasury note rising to 3.92% from Thursday's close of 3.84%.

Oil prices slipped after two days of gains. Crude for June delivery fell 36 cents to $25.67 a barrel in New York trading.

In other highlights:

* Airline stocks rallied after Merrill Lynch said the worst may be over for the industry and lifted its rating on several airlines to "buy" from "neutral." AMR, parent of American Airlines, surged 66 cents, or 13.7%, to $5.47. Northwest leaped $1.30, or 15.2%, to $9.85 and Continental jumped $1.94, or 19.7%, to $11.80.

* Online commerce company USA Interactive, which operates the Web sites Expedia and Hotels.com, climbed to an all-time high as investors continued to cheer its results.

The shares, which closed at $28.36 on April 25, rose $2.28 to $34.96.

* Stocks of communications chip makers also rallied, led by Cypress Semiconductor, which forecast better-than-expected results and gained $1.12 to $10.60. Analysts said the gains were fueled by optimism about business in the second quarter.

* Boeing rose $1.51, or 5.5%, to $28.62 and was the Dow's biggest percentage gainer. On Thursday, Boeing said that its plan to lease commercial jets to the U.S. Air Force as refueling tankers could generate as much as $2.8 billon in support revenue over the life of the proposed $17-billion lease.

* Among the losers, Cigna tumbled $2.87 to $50.78 after the health insurer reported higher quarterly earnings, but investors worried about declines in its membership and Cigna's ability to control health-care costs.

Market Roundup, C4-5

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