Posted at 12:36 p.m., Monday, December 22, 2003
Orange alert limits Wall Street's gains
Associated PressNEW YORK — Wall Street pushed to new 52-week highs today as investors cautiously picked up shares on expectations of stronger growth in 2004. A heightened terror alert limited gains.
Trading was choppy and light as many investors got an early start on the Christmas holiday. The stock market will be open for a half session Wednesday, close on Thursday for Christmas and then reopen for a half session Friday.
"There’s a little bit of caution given the security alert," said Russ Koesterich, U.S. equity strategist at State Street Corp. in Boston. "That might be holding back what normally would be some follow through from last week’s gains."
"Generally speaking, this part of the year is seasonally very strong, and you’ve got strong earnings and economics backing up the market," he added. "If we can get past this blip due to the terror alert, we have the potential to go higher."
The Dow Jones industrial average closed up 59.78, or 0.6 percent, at 10,338.00, having advanced 2.4 percent last week to notch its fourth straight week of gains. Today, the blue chip average rose to its highest level since May 17, 2002, when it stood at 10,353.08.
The broader market also rose. The Nasdaq composite index gained 4.78, or 0.3 percent, to 1,955.80, having edged up 0.1 percent last week.
And the Standard & Poor’s 500 index rose 4.28, or 0.4 percent, to 1,092.94, following a weekly gain of 1.4 percent. Today’s close was the highest level since May 23, 2002, when the index closed at 1,097.08.
Yesterday, the government raised the national terror level to orange, indicating a high risk of terrorist attack. Homeland Security chief Tom Ridge said threat indicators are "perhaps greater now than at any point" since the Sept. 11, 2001 attacks.
Stocks typically climb at the end of December and beginning of January as investors put year-end bonuses and dividends to work on optimism for the new year. But analysts have wondered whether the so-called Santa Claus rally would happen given this year’s solid gains.
Since hitting a low on March 11, the Dow is up 37 percent, the Nasdaq has climbed 54 percent and the S&P has gained about 37 percent.
"There’s a lot of uncertainty out there," said Ed Peters, chief investment officer at PanAgora Asset Management Inc. "The market has run up quite a bit. At the same time, we’re facing the new terror threat and anecdotal evidence that retail sales will be lower than expected."
"Those three things combined will make people hesitant to commit new money," he said.
Pfizer Inc. rose 3 cents to $34.30 after it agreed to buy drug development company Esperion Therapeutics Inc. for $1.3 billion. Esperion jumped $11.83, or 52.1 percent, to $34.53.
Ford Motor Co. gained $1.55, or 10.2 percent, to $16.79 after the automaker raised its 2003 earnings outlook, citing strong sales of its new F-150 truck.
ConAgra Foods Inc. rose 67 cents to $26.15 after the packaged foods company reported quarterly earnings that came in higher than expectations.
Decliners included Inspire Pharmaceuticals Inc., which slid $3.21 to $13.14, after the Food and Drug Administration requested an additional clinical study on the company’s potential treatment of dry eye.
Advancing issues outnumbered decliners about 8 to 5 on the New York Stock Exchange.
The Russell 2000 index, a barometer of smaller company stocks, rose 2.49, or 0.5 percent, to 549.37.