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The Honolulu Advertiser

Posted at 11:53 a.m., Monday, August 18, 2003

Dow closes session with 14-month high

Hawai'i Stocks
Updated Market Chart

By Amy Baldwin
Associated Press

NEW YORK — The Dow Jones industrials climbed to their highest close in 14 months today, rising sharply in a quiet session after

last week’s blackout. Good earnings news from Lowe’s and Toys "R" Us helped lift stocks, but there was little other news to influence the market.

"There is some relief," that the outage was short-lived, said Brian Williamson, an equity trader at The Boston Company Asset Management. "We are back in a normal, quiet day."

Stephen Carl, principal and head of equity trading at The Williams Capital Group, said: "It is just a lackluster day."

The upturn followed the lightest session of the year Friday as the nation coped with the largest power outage in U.S. history, which left 50 million people without power from the East Coast to Michigan. Many traders stayed home Friday after exchanges lost electricity in Thursday’s blackout. Many others on Wall Street were already gone on summer vacation.

Analysts say that when there’s nothing to guide the market, its tendency now is to advance. Wall Street observers credit that upward bias to better-than-expected second-quarter earnings and improving economic data.

The Dow closed today up 90.76, or 1 percent, 9,412.45, according to preliminary calculations. On Friday, the Dow gained 11.13. The last time the Dow stood higher at the end of a session was June 20, 2002, when it was at 9,431.77.

The broader market was also higher. The Nasdaq composite index rose 37.48, or 2.2 percent, to 1,739.49, after eking out a gain of 1.67 Friday. The Standard & Poor’s 500 index advanced 9.07, or

0.9 percent, to 999.74, after creeping up 0.16 the previous session.

First Energy dropped $2.86 to $27.75. The Ohio-based company owns four of the five power lines that may have triggered the power outage. In another blow, First Energy warned about its $12.5 billion debt and cut earnings estimates.

Strong earnings news contributed to Wall Street’s gains.

Lowe’s rose $3.06 to $51.96 after reporting second-quarter profits that exceeded analysts’ expectations by 6 cents a share and saying it anticipates beating Wall Street’s yearly earnings estimate.

Toys "R" Us traded up 83 cents to $12.71 after raising its yearly earnings outlook.

Brokerage house upgrades also gave the market some of its lift.

AnnTaylor advanced 31 cents to $33.90 after UBS Warburg raised its rating on the retailer to "buy" from "neutral."

Kroger rose 20 cents to $18.61 after J.P. Morgan upgraded the grocery store operator to "neutral" from "underweight."

Aside from the upgrades and positive earnings news, analysts said today’s gains were because of technical factors. The market has managed to just trade sideways rather than fall recently as interest rates rose, and it was a sign of strength that prompted investors to send stocks higher, said Kevin Gaughan, portfolio manager and equity strategist at Strong Financial Corp. in Milwaukee.

"We basically treaded water for a time. … I think the market is saying we have been through the worst of the interest rate correction," Gaughan said.

Rising interest rates often cause investors to worry that spending by companies and consumers will decline and hurt the economy.

Advancing issues outnumbered decliners slightly more than 2 to 1 on the New York Stock Exchange. Trading volume was light, but well ahead of Friday’s dealings.

The Russell 2000 index, the barometer of smaller company stocks, rose 9.00, or 1.9 percent, to 480.92.

Overseas, Japan’s Nikkei stock average finished Wednesday up

1.7 percent. In Europe, France’s CAC-40 advanced 0.7 percent, Britain’s FTSE 100 rose 0.6 percent and Germany’s DAX index climbed 1.8 percent.