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Stocks Climb to 52-Week Highs

Some analysts say they're encouraged by Wall Street's ability this summer to hold on to spring gains.

September 03, 2003|From Times Staff and Wire Reports

Wall Street returned from summer vacation in a buying mood Tuesday, sending major stock indexes to fresh 52-week highs.

At the same time, Treasury bond values took another hit, driving yields up.

Both markets were reacting in part to more data showing the U.S. economy is accelerating: The Institute for Supply Management said Tuesday that manufacturing activity in August was the strongest in eight months.

The news gave stocks only a moderate lift early in the day, but buyers rushed in during the final 90 minutes of trading.

The blue-chip Standard & Poor's 500 index gained 13.98 points, or 1.4%, to 1,021.99, its highest close since June 2002.

That eclipsed the previous 2003 high of 1,011.66 reached June 17.

The Dow Jones industrial average jumped 107.45 points, or 1.1%, to 9,523.27, a 14-month high that topped the previous peak of 9,428.90 on Aug. 19.

Many other market indexes already were at 52-week highs by late last week, boosted by a continuing wave of upbeat economic reports. The broader market continued to gain ground Tuesday.

The technology-dominated Nasdaq composite index soared 31.03 points, or 1.7%, to 1,841.48, its highest closing level since April 2002.

The Russell 2,000 index of smaller stocks rallied 10.08 points, or 2%, to 507.50, also the highest since April 2002.

Rising stocks outnumbered losers by 24 to 9 on the New York Stock Exchange and by 22 to 10 on Nasdaq, in active trading.

"I think even the most battle-hardened bears by now have to admit it looks like [corporate] earnings are getting better and the economy is getting better," said Ed Keon, investment strategist at Prudential Securities in New York.

For investors, "I think you have to bet on the most cyclical parts of the market and the economy," he said.

Many stock buyers were doing just that Tuesday by focusing on technology issues and heavy-industry stocks.

Wall Street pros have been impressed by the market's ability this summer to hold on to its spring gains, even as Treasury bond yields surged amid the improving economy.

The breadth of the market's rally in recent weeks also has encouraged many experts.

Now, bulls say more investors are likely to jump on stocks' bandwagon.

With short-term accounts such as money market funds yielding less than 1%, while high-quality bond values slide as long-term rates rise, investors are left with few decent alternatives other than stocks, market optimists say.

"Money is slowly, but surely, leaking out of cash and into equities," Robert Doll, chief investment officer at Merrill Lynch Investment Management, told Bloomberg News.

Treasury bond yields jumped Tuesday as investors dumped the securities. The 10-year T-note yield ended at 4.60%, up from 4.46% on Friday and the highest since July 2002.

The two-year T-note rose to 2.04%, up from 1.97% on Friday and the highest since December.

Government bond yields also soared Tuesday in Germany and Japan on expectations that those economies would revive. The 10-year German government bond yield rose to 4.34% from 4.22% on Monday. The 10-year Japanese government bond yield jumped to a one-year high of 1.67% from 1.59%.

Among Tuesday's highlights:

* Computer hardware stocks shot up as brokerage Goldman, Sachs & Co. predicted that spending on tech equipment would continue to rise.

IBM soared $3.75 to $85.76 while Seagate Technology jumped $1.54 to $24.55. Dell gained 97 cents to $33.59 and Cisco Systems rose 45 cents to $19.59.

* Internet-related names were mostly higher. Amazon.com rose $1.01 to $47.33 and Sohu.com gained $4.55 to $34.47.

* In the industrial sector, Potash rose $1.07 to $71.97, Ford Motor jumped 75 cents to $12.31, General Motors gained $1.38 to $42.48 and Illinois Tool Works rose $1.51 to $73.80.

But Deere lost 57 cents to $55.94 and Ingersoll-Rand slid 67 cents to $58.85.

* Eastman Kodak soared $1.91, or 6.9%, to $29.80, making it the biggest gainer in the Dow index. Some traders said investors were gaining confidence that the company wouldn't reduce its cash dividend payment this year despite weaker earnings. The stock's current annualized dividend yield is 6%.

* Financial stocks were strong. Merrill Lynch rallied $1.20 to $54.98, Pacific Union Bank rose $1.12 to $19.48 and Wells Fargo climbed $1.01 to $51.15.

* The biotech sector lured buyers. Amgen soared $1.90 to $67.84, Genentech was up $1.84 to $81.24 and Genzyme surged $2.37 to $49.50.

* Airline stocks were broadly higher. Delta rocketed $1.48 to $14.35, Continental leaped $1.24 to $16.50 and JetBlue was up 50 cents to $54.40.

* On the downside, gold stocks lost ground as the metal's price eased. Barrick Gold was off 25 cents to $19.96 and Newmont Mining slid $1.36 to $37.90.

Market Roundup, C8-9

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