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The Honolulu Advertiser

Posted on: Saturday, December 21, 2002

Greenspan assessment gives market a boost

By Hope Yen
Associated Press

NEW YORK — Stocks surged yesterday as investors shrugged off worries about a war with Iraq and drew some optimism from Federal Reserve Chairman Alan Greenspan's latest assessment of the economy. The three main indexes posted a weekly gain to snap a two-week losing streak.

Analysts said many investors were looking to pick up bargains after three days of declines. News that financial brokerages had reached a settlement on conflict-of-interest charges and that Senate Republican leader Trent Lott resigned his leadership post added to the good mood.

"The fewer of those types of things people have to worry about, the more people can focus on the fact that the economic news is not all that bad and the prospects for the stock market in 2003 are pretty good," said Scott Wren, equity strategist for A.G. Edwards & Sons.

For the week, the Dow rose 0.9 percent, while the Nasdaq edged up 0.1 percent and the S&P 500 gained 0.7 percent.

Greenspan told the Economic Club of New York late Thursday that since the Fed's last rate cut on Nov. 6, there is some evidence that the "U.S. economy has been working its way through a soft patch." He added that the United States faces no immediate threat of deflation.

Meanwhile, the Commerce Department reported that the U.S. economy posted a solid growth rate of 4 percent in the third quarter, unchanged from the estimate made a month ago, even as worries persist about just how much the economy is weakening.

And 10 of the nation's largest brokerages, including Citigroup and Goldman Sachs, agreed to pay about $1.4 billion to resolve conflict-of-interest allegations in one of the largest settlements ever with securities regulators.

That helped lift financial sector stocks, with Citigroup rising $1.14 to $38.14 and Morgan Stanley jumping $1.74 to $42.04.

Consolidated volume on the New York exchange was heavy at 2.19 billion shares, compared with 1.70 billion traded Thursday.