Posted at 12:34 p.m., Friday, November 22, 2002
Blue chips' streak longest since 1998
By Hope Yen
Today's market was mostly down, as investors couldn't resist a chance to cash in quick gains from a two-day rally.
Analysts said a pullback was somewhat expected after a two-day surge pushed stocks to their highest level in months. Lighter trading in advance of the Thanksgiving holiday also contributed to price swings.
"We're having a bit of pause after yesterday's big rally," said Ed Peters, chief investment officer at PanAgora Asset Management Inc. "With the advance being so quick, people are reassessing."
The Dow fell 40.31, or 0.5 percent, to close at 8,804.84, according to preliminary calculations, to snap a two-day gain of 370 points. Yesterday, blue chips closed at their highest level since Aug. 26, when it stood at 8,919.01.
The broader market finished mixed. The Nasdaq composite index inched up 1.18, or 0.1 percent, to 1,468.73, after closing yesterday at a level not seen since July. The Standard & Poor's 500 index declined 3.21, or 0.3 percent, to 930.55.
For the week, the Dow gained 2.6 percent to post its seventh winning week, a feat not seen since the period ended March 20, 1998. The Nasdaq climbed 4.1 percent and the S&P 500 rose 2.3 percent, their sixth week of gains in seven weeks.
Analysts said investors have been upbeat after Wall Street's recent rally and are generally looking to buy because the end of the year traditionally has been the strongest time for stocks.
"The tone is more positive," said Thomas Sassi, who manages $4 billion in value funds for Deutsche Asset Management in New York. "The economy is growing and profits will rise."
Stocks were helped this week by a Labor Department report showing new claims for state unemployment insurance fell to the lowest in four months and a report from the Federal Reserve Bank of Philadelphia showing manufacturing in that region unexpectedly expanded in November after contracting 13 percent in October.
"The macroeconomic factors are all positive for the market to go higher," said Art Hogan, chief market analyst at Jefferies & Co. in Boston. "The Republicans are in charge, interest rates and jobless numbers are lower, and inflation is nil."
But analysts caution that stocks remain vulnerable to declines due to profit-taking as well as concerns about terrorism and a war with Iraq.
Philip S. Dow, managing director of equity strategy at Dain Rauscher Wessels, said he believes the market has the potential to see an additional 5 to 7 percent of gains by year's end, as money managers scramble to avoid missing out on the recent advance.
Brocade Communications dropped $2, or 27.5 percent, to $5.28 after the data storage networking company warned of lower-than-expected first-quarter revenue.
Technology company PeopleSoft dropped $1.04 to $19.99 after Salomon Smith Barney cut the company's stock rating, citing overvaluation.
Gainers included TiVo, which rose 47 cents to $6.71, after the digital video recording company reported a narrower-than-expected loss in the third quarter.
Boeing, the world's largest planemaker, rose $1.83 to $34.27. UAL Corp. may get help from a dozen global banks that are working together to come up with a refinancing plan for about $7 billion in leases on United's fleet of planes, the New York Times reported, citing unidentified bankers in the group.
Caterpillar Inc., the largest maker of earthmoving equipment, added 51 cents to $48.35. Eastman Kodak Co., the biggest maker of film, gained 92 cents to $37.24.
Safeway Inc. rose $1.71 to $23.75, and Kroger Co. advanced 48 cents to $15.98. Salomon Smith Barney analyst Lisa Cartwright raised her rating on food retailers to "overweight" from "underweight." The shares fetch their lowest prices relative to earnings in 10 years and should benefit in 2003 from a stronger consumer and rising food prices, Cartwright wrote in a note to clients.
Advancing issues outnumbered decliners about 5 to 4 on the New York Stock Exchange. Volume was moderate. The Russell 2000 index, which tracks smaller company stocks, rose 2.32, or 0.6 percent, to 400.00.
Overseas, Japan's Nikkei stock average finished 1.2 percent higher. In Europe, France's CAC-40 rose 0.5 percent, Britain's FTSE 100 slipped 0.4 percent and Germany's DAX index rose 0.5 percent.