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Stocks Mostly Higher After 3 Days of Selling

Dow, S&P eke out gains after Federal Reserve chairman says he's cautiously optimistic about the economy.

May 22, 2003|From Times Staff and Wire Reports

Blue-chip stocks ended slightly higher Wednesday as investors took heart from guardedly upbeat remarks by Federal Reserve Chairman Alan Greenspan, although tech stocks were mixed after a bearish call on Cisco Systems.

Concerns about a possible terrorist attack in the United States kept sentiment in check after a purported audiotape by a top Al Qaeda official urged Muslims to strike Western targets.

Washington put U.S. military bases on their highest alert after a week of suicide bombings in Saudi Arabia and Morocco, and a Saudi source said that nation had foiled a Sept. 11-style hijack attempt, though the government denied it.

The Dow Jones industrial average edged up 25.07 points, or 0.3%, to 8,516.43. The Standard & Poor's 500 index added 3.69 points, or 0.4%, to 923.42. But the technology-laden Nasdaq composite index slipped 1.22 points, or 0.1%, ending at 1,489.87.

Winners led losers by 3 to 2 on the New York Stock Exchange and were about even on Nasdaq. Trading was active.

The day's gains broke a three-session losing streak for the Dow and the S&P 500, and helped to blunt some of the recent selling by investors taking profits from the market's five-week rally.

In congressional testimony, Greenspan said he was cautiously optimistic about the potential for the economy to pick up in the second half of 2003.

Greenspan "stated the party line that it looks like the economy will recover, but the timing of it remains uncertain," said Victory Capital Management chief market strategist Richard Nash. Still, "the pullbacks have been fairly orderly, and have generally met with some pretty decent buying."

Shares of tobacco companies were among the NYSE's biggest percentage gainers on news that a Florida appeals court reversed a landmark $145-billion judgment against major U.S. tobacco companies -- seen as a major victory for the tobacco industry.

Altria Group, parent of top U.S. cigarette maker Philip Morris USA, jumped more than 9% and helped prop up the Dow. Altria ended up $3.39 at $38.30.

But Cisco, the biggest maker of equipment that directs Internet traffic, slid after investment bank DB Securities said it cut its rating on the stock to "hold" from "buy" for valuation reasons. Cisco fell 29 cents to $15.70.

In commodities trading, gold continued to rally, fueled by renewed concerns about terrorism and the dollar's recent losses against the euro. Gold gained $5.70 to $372 an ounce in New York trading.

Oil also rose after reports indicating that U.S. crude supplies remain tight. The July contract for crude oil, which became the near-month contract on Wednesday, rose 62 cents to $29.03 a barrel on the New York Mercantile Exchange.

The battered greenback, meanwhile, was stable versus the euro and notched modest gains against the yen, while yields on Treasury securities ticked up. The 10-year T-note rose to 3.40% from Tuesday's 45-year low of 3.36%.

In other highlights:

* Natural-gas stocks climbed after Greenspan suggested in his testimony that inventories aren't increasing fast enough to avoid tight supplies in winter. Among drilling companies, Nabors Industries, the world's largest natural-gas driller, rose $1.85 to $43.62, Noble advanced $1.63 to $35.76 and Diamond Offshore Drilling rose $1.22 to $22.05.

* Shares of U.S. hamburger chains that were battered Tuesday after disclosure of a case of "mad-cow" disease in Canada were mixed Wednesday. McDonald's rose 35 cents to $17.30, but Wendy's International slipped 16 cents to $28.39.

* Computer-related shares were the biggest drag on the S&P 500. Dell Computer, the No. 2 personal-computer maker, dropped 47 cents to $29.86. Microsoft lost 60 cents to $24.03.

But computer maker Hewlett-Packard, a Dow member, gained 89 cents to $17.94. On Tuesday, HP reported better-than-expected quarterly profit.

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