Posted on: Friday, November 30, 2001

Investors nudge stocks mostly higher amid hopes for 2002

By Amy Baldwin
Associated Press

NEW YORK — Investors bid stocks mostly higher today, overcoming their disappointment over two weak economic readings and focusing once more on hopes for 2002. Technology dipped on minor profit-taking.

Prices fell more broadly earlier in the session, in part because of a revised reading on the nation's gross domestic product — the sum of U.S. goods and services — in the third quarter.

The Commerce Department reported the economy contracted at a rate of 1.1 percent, steeper than the 0.4 percent decline reported last month and larger than the 0.9 percent decrease analysts expected.

Investors were also initially unsettled by a drop in the Purchasing Management Association of Chicago index of area business activity, which fell to 41.1 in November from 46.2 in October.

"We're able to shrug it off. I think the trend of economic data have been positive, and so individual pieces aren't toppling over the apple cart," said Arthur Hogan, chief market analyst for Jefferies & Co. "The momentum seems to be to buy stocks."

The Dow Jones industrial average closed up 22.14, or 0.2 percent, at 9,851.56. The Dow is 19.6 percent above its low of 8,235.81, where it closed Sept. 21 following the terror attacks.

But the broader market ended today slightly lower. The Nasdaq composite index declined 2.70, or 0.1 percent to 1,930.56, and the Standard & Poor's 500 index slipped 0.74, or 0.06 percent, at 1,139.46.

Throughout the past week, investors have been wavering between optimism about the future and concerns about the current economy.

Their indecision was apparent in Tuesday's session, when the Dow dropped 110 points on a weaker-than-expected reading on consumer confidence, and in yesterday's trading, when the blue chips rose 117 after the Commerce Department reported durable goods orders soared a record 12.8 percent in October.

Given how strongly the market has rallied since late September, analysts said there is plenty of room for investors to take profits from Wall Street.

The Nasdaq is 35.7 percent above its post-attack low; the S & P 500, up 18 percent.

Analysts also said the market will have a tough time climbing above current levels, at least until there are signs that business is improving.

"The market has been rip-roaring ahead. It may be a while before we resume the uptrend on a definitive basis," said Ronald J. Hill, investment strategist at Brown Brothers Harriman & Co.

Upbeat prospects for the future boosted some stocks. Home Depot climbed $2.63 to $46.65 after the retailer affirmed its fourth-quarter and yearly earnings estimates, said revenue will increase at least 15 percent annually over the next two years, and said it is still on track to top $100 billion in yearly revenue by 2005. Home Depot was the strongest Dow industrial.

General Motors, which said it expects the economy to recover late next year and for 2002 vehicle sales to be between 15 million and 15.5 million, advanced $1.11 to $49.70. GM also is a Dow component.

But tech stocks, pegged by many analysts as the sector to lead the market higher, suffered as investors cashed in recent profits.

The sector was mixed. Microsoft fell 63 cents to $64.21, but Dell Computer rose 87 cents to $27.93.

Advancing issues narrowly outnumbered decliners 16 to 15 on the New York Stock Exchange.

Volume came to 1.34 billion shares, below the 1.37 billion traded yesterday.

The Russell 2000 index, which tracks smaller company stocks, decreased 2.55, or 0.6 percent, to 460.78.