No news is good news

The uneventful CEO certification
deadline looks like one step
in a broader Wall Street recovery

---

By Lisa Singhania
Associated Press

NEW YORK >> In the end, the event Wall Street anxiously awaited all summer went smoothly: Hundreds of chief executives certified their companies' financial results, and with only a small number of restatements.

Investors responded with a rally, sending the Dow Jones industrials up 335 points in two days, but analysts note that several other issues must be resolved before the market's recovery is complete — including the health of the economy and corporate earnings.

"The more confidence that investors can gain that we may be nearing the end of the accounting scandals and the SEC investigations, the better that is for the stock market," said Brian Bush, director of equity research at Stephens Inc. "It is not the single event that is going to provide investors with the comfort that they need to begin really putting money into the market."

Although a final tally is not yet complete, it appears that most of the companies that had to file earnings certifications with the Securities and Exchange Commission by last Wednesday's deadline were able to do so with minimal delays or revisions. The lack of negative surprises was heartening to a market that spent the first half of summer sliding as one corporation after another revealed problems or issues with financial statements.

There are other reasons for investors to feel encouraged, market observers say. The Dow is up more than 1,000 points from its close on July 23, barely three weeks ago. Although the gains have not come easily — the Dow gained 1,000 points, then lost 700 and then gained another 700 back analysts say it appears the market is stabilizing.

And despite a string of negative economic reports this past week, stocks held relatively steady.

"We're seeing a pattern of higher highs and higher lows on the market. I'm very impressed," said John Lynch, chief market analyst, Evergreen Investments. "I'd like to see better volume on up days, though what we're seeing is still better than what we saw a month ago."

The major indexes ended the week higher for the second straight Friday — a feat last accomplished more than five months ago, in the two-week period that ended March 8.

But the market will need more positive reports, particularly on the economy, to keep moving. In the past week alone, there were weaker-than-expected job and consumer sentiment data, as well as sluggish industrial production numbers. Housing construction levels also fell, although inflation rose less than analysts had predicted.

Market observers remain cautious in assessing the significance of the reports, and say they're waiting for August economic figures before drawing any conclusions. And as the end of the third quarter approaches, they'll be waiting to see what predictions companies make about their earnings.

Wall Street always trades on the future, and many analysts agree that most investors are operating on the assumption that the economic recovery is going to be slow. At least for the moment, they're not particularly concerned about the possibility of a return to recession.

"The weakness of a slowing economy is pretty much factored in with the lows we set three weeks ago," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. "But if there's a double-dip recession, we could fall back more."

For the week, the Dow rose 32.61, or 0.4 percent. The blue chip index closed down 40.08 yesterday at 8,778.06.

The Nasdaq composite index had a weekly gain of 54.89, or 4.2 percent. Yesterday, the Nasdaq rose 16.00 to 1,361.01.

The Standard & Poor's 500 index gained 20.13, or 2.2 percent, for the week following a loss of 1.48 yesterday to close at 928.77.

And the Russell 2000 index recorded a weekly advance of 7.52, or 1.9 percent. Yesterday, the Russell, which tracks smaller company stocks, advanced 5.24 to 395.97.

The Wilshire Associates Equity Index, which represents the combined market value of all New York Stock Exchange, American Stock Exchange and Nasdaq issues, ended the week at $8.770 trillion, up $198.41 billion from the previous week. A year ago, the index was $10.760 trillion.