Closing Market Report

Star-Bulletin news services

Friday, February 21, 2003

Low inflation hands
stocks their second
winning week

By Hope Yen
Associated Press

NEW YORK >> The Labor Department's report of a moderate increase in inflation helped soothe Wall Street today, sending stocks to their second straight winning week despite concerns about Iraq and a U.N. Security Council meeting on Monday.

Analysts said many investors couldn't resist picking up bargains after four weeks of steep declines. Trading remained light, leading to exaggerated price swings.

"A lot of stocks have gotten down to levels where people want to buy them and where maybe the economy has bottomed," said Barry Berman, head trader for Robert W. Baird & Co. "But the question of Iraq and whether or not we go to war ... continues to hang over the market."

"There's just not been a lot of bad news today," he added. "But how far it goes before running into more profit-taking, who knows."

Advancing issues outnumbered decliners nearly 5 to 2 on the New York Stock Exchange. Volume was light.

The Dow Jones industrial average climbed 103.15, or 1.3 percent, to close at 8,018.11, following a two-day loss of 126 points.

The broader market also finished higher. The Nasdaq composite index gained 17.79, or 1.3 percent, to 1,349.02. The Standard & Poor's 500 index rose 11.07, or 1.3 percent, to 848.17. The Russell 2000 index rose 4.62, or 1.3 percent, to 364.36.

The price of the Treasury's 10-year note was down 1/8 point, while its yield rose to 3.88 percent from 3.87 percent late yesterday. Two-year Treasury notes fell 1/32 point, while their yield rose to 1.59 percent from 1.58 percent yesterday.

The three main gauges posted their second week of advances, a feat not seen since the period ended Jan. 10. For the week, the Dow climbed 1.4 percent, the Nasdaq gained 3 percent, and the S&P 500 rose 1.6 percent.

The government said consumer prices rose by 0.3 percent in January as worries that a possible war with Iraq helped push up energy prices. The increase matched analysts' expectations.

Wall Street was particularly nervous prior to release of the report after the department said yesterday that inflation at the producer, or wholesale, level jumped 1.6 percent in January, the biggest increase in 13 years. Friday's figures were modest in comparison. Three other economic reports yesterday also raised investors' fears about the health of the economy.

Target climbed $1.71 to $28.48 after U.S. Bancorp Piper Jaffray raised the retailer's stock rating to "strong buy" from "outperform."

Verizon gained 88 cents to $35.64 after Credit Suisse First Boston raised the telecom company's stock rating to "outperform" from "neutral," citing low valuation.

Agilent rose 85 cents to $13.45 after the maker of test and measurement equipment posted a first-quarter loss and said it would cut 4,000 jobs to reduce expenses.

Overseas, Japan's Nikkei stock average finished 1.6 percent lower. In Europe, France's CAC-40 gained 0.9 percent, Britain's FTSE 100 rose 1.1 percent and Germany's DAX index climbed 2.2 percent.

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