Posted at 11:58 a.m., Monday, December 8, 2003
Stocks bounce up on investor optimism
By Hope Yen
"Even though folks are focusing on the jobs report being a lot weaker than anticipated, the bottom line is we still created jobs and that’s a whole lot better than six months ago," said John Caldwell, chief equity strategist for McDonald Financial Group. "The strength in the economy is looking real and sustainable at least through next year."
The Dow Jones industrial average closed up 102.59, or 1 percent, at 9,965.27, having gained 0.8 percent in the previous week. It was the highest close since May 28, 2002, when the blue-chip average stood at 9,981.58.
The broader market also finished higher. The Nasdaq composite index rose 11.03, or 0.6 percent, to 1,948.85, following a weekly decline of 1.1 percent. The Standard & Poor’s 500 index gained 7.80, or 0.7 percent, to 1,069.30, having risen 0.3 percent.
Investors brushed aside concerns that the dollar slid to a new record low today against the euro. Analysts say many investors were instead betting that the Federal Reserve will indicate that it plans to leave rates unchanged for some time when it meets tomorrow.
In its last several meetings, the Fed has said it wouldn’t likely raise rates for a "considerable period."
"Debate is swirling on the wording in their statement and whether they drop the 'considerable period’ terminology," Caldwell said. "Any movement down that path might spook the market."
Investors have been increasingly optimistic about the economy, sending stocks higher in recent weeks before the unemployment report Friday prompted worries of a more uneven recovery. Some analysts also believe that stock valuations, particularly in the tech sector, might be a bit high.
"I think mostly likely people are looking to trim some of their positions, and techs had a good run," said Jeff Swensen, senior trader at John Hancock Funds, who believes trading will be choppy in the coming weeks. "If you want to lock in profits, that’s a likely area to look at."
JetBlue Airways Corp. gained $1.94 to $27.80 after Merrill Lynch upgraded the airlines’ stock rating to "buy" from "neutral."
Baxter International Inc. rose $1.30 to $29.50 after Merrill Lynch upgraded the drug company’s stock rating to "buy" from "neutral."
Decliners included Freddie Mac, which fell 20 cents to $55.15, after the second-largest U.S. buyer of home mortgages named Richard Syron as its new chairman and chief executive; he replaces Gregory Parseghian, who was ousted in August after being implicated in accounting irregularities.
McDonald’s Corp. fell 37 cents to $25.62 after the fast-food giant reported November same-store sales rose 6.4 percent and total sales increased 14.9 percent from last year.
Advancing issues outnumbered decliners 2 to 1 on the New York Stock Exchange. Volume was very light.
The Russell 2000 index, which tracks smaller company stocks, rose 4.03, or 0.8 percent, to 543.04.
Overseas, Japan’s Nikkei stock average finished 3.2 percent lower.; Britain’s FTSE 100 decreased 0.2 percent, France’s CAC-40 fell 0.6 percent, and Germany’s DAX index declined 0.9 percent.