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The Honolulu Advertiser

Posted at 11:25 a.m., Friday, August 8, 2003

Dow gains 64 as caution dominates Wall Street

Hawai'i Stocks
Updated Market Chart

By Hope Yen
Associated Press

NEW YORK — Wall Street ended an indecisive week on a quiet note today, with investors half-heartedly picking up shares in response to strong sales from McDonald’s. Tech stocks sagged on a profit warning from Nvidia.

Analysts said investors were staying away from major commitments, with many opting to wait for guidance on the economic outlook when the Federal Reserve’s Open Market Committee meets Tuesday. If there is any sign the Fed might raise rates, “that would absolutely knock the market off its haunches,” said Tracy Herrick, chief investment strategist at Jefferies & Co.

“We had good news from McDonald’s and a couple of upgrades … such as Computer Associates, so the market has a better tone to it,” said Todd Clark, head of listed equity trading at Wells Fargo Securities. “But we’re having a classic summer Friday without a whole lot of impetus.”

The Dow Jones industrial average closed up 64.64, or 0.7 percent, at 9,191.09, following a two-day gain of 90 points.

The broader market finished mixed. The Nasdaq composite index fell 8.15, or 0.5 percent, to 1,644.03. The Standard & Poor’s 500 index rose 3.47, or 0.4 percent, to 977.59.

For the week, the three main gauges also ended mixed, with the Dow gaining 0.4 percent, the Nasdaq losing 4.2 percent, and the S&P declining 0.3 percent.

McDonald’s advanced $1.83, or 8.3 percent, to $23.89 after the fast-food giant said July sales in its U.S. business rose 9.9 percent.

Stocks have surged since mid-March, but investors now worry the advance might have come too fast, and they want to see stronger evidence of a solid economic recovery before pushing prices significantly higher. Investors also fear that rising interest rates might stifle the recovery.

Clark said investors worry that high rates will dampen mortgage refinancing and home sales, one of the few bright spots in the uncertain economic recovery. A rebound in the bond market that sends prices higher and yields lower would help lift stocks, he said.

“By and large the data are showing the economy is doing better,” Clark said. “But one of the big focuses is the shift from company-specific news to the consumer again … The market has been encouraged that the bond market rallied this week.”

Computer Associates rose 57 cents to $24.17 after Deutsche Securities upgraded the company’s stock to “buy” from “hold.”

Teva Pharmaceutical Industries gained 31 cents to $55.07 after the Food and Drug Administration gave the biotech company tentative approval to make a generic form of the epilepsy treatment Neurontin.

Decliners included Nvidia, which tumbled $3.80, to $15.50, after the company reported a larger quarterly profit but said higher technology costs are hurting gross margins; it also cut its third-quarter outlook.

Advancing issues outnumbered decliners about 9 to 5 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, which tracks smaller company stocks, edged up 0.17, or 0.04 percent, to 453.94.

France’s CAC-40 advanced 1.1 percent, Britain’s FTSE 100 rose 1.3 percent and Germany’s DAX index inched up 0.01 percent.