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The Honolulu Advertiser

Posted at 11:48 a.m., Wednesday, October 1, 2003

Dow posts biggest gain since June

Hawai'i Stocks
Updated Market Chart

By Hope Yen
Associated Press

NEW YORK — Wall Street rebounded today as reports of manufacturing and construction spending growth brought buyers back to the market after nearly a week of declines. The Dow Jones industrials climbed 194 points to post their biggest gain since June.

The Standard & Poor’s 500 index notched its best advance in six months, while the Nasdaq composite had its biggest jump in three months.

Analysts said the reports soothed investors who were nervous after a Midwest report yesterday suggested manufacturing activity may be deteriorating. Many also were jumping back in after end-of-quarter "window-dressing," when fund managers often sell to lock in big gains.

"People were concerned that today’s figures would be much weaker, but they came in roughly in line, so it helped support the market’s gain," said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm.

The Dow closed up 194.14, or 2.1 percent, at 9,469.20, more than recouping the 105-point decline yesterday that was the fourth losing session in five. Today’s advance was the biggest point gain since June 16, when the average rose 201.84.

The broader market also advanced. The Nasdaq gained 45.31, or 2.5 percent, to 1,832.25. It was the biggest jump since July 7, when the tech-focused index climbed 57.25 points.

The S&P 500 rose 22.25, or 2.2 percent, to 1,018.22. It was the biggest advance since April 2, when the index climbed 22.42.

The Institute for Supply Management reported today that its manufacturing index stood at 53.7 in September, down from 54.7 in August. The figure was slightly below estimates of 54.8, but it still reflected a growing economy since a reading above 50 indicates expansion.

Meanwhile, construction spending came in at a seasonally adjusted annual rate of $882.7 billion in August, representing a 0.2 percent increase from July, the Commerce Department reported. The level was the highest since January although it was slightly below estimates of 0.4 percent growth.

Stocks have moved mostly higher since mid-March, but lately investors have been questioning whether the valuations might be too high. That led to some declines in September that gave the Dow and S&P their first losing month since February; the Nasdaq posted its first monthly loss since January.

Jeff Swensen, senior trader at John Hancock Funds, said investors were still largely upbeat. He attributed much of the market’s recent losses to fund managers seeking to dress up their portfolio before yesterday’s close of the third quarter.

"People are optimistic that profits will continue to improve in the third and fourth quarter," he said. "That’s overshadowing the recently weak economic data."

Dunay, however, cautioned that trading might be uneven in the weeks ahead as the third-quarter earnings season begins in earnest. Investors will be seeking signs of strong revenue growth rather than profit gains from cost-cutting.

Advancing issues outnumbered decliners 11 to 2 on the New York Stock Exchange. Volume was moderate.